THE  LIBRARY 

OF 

THE  UNIVERSITY 

OF  CALIFORNIA 

LOS  ANGELES 


I 


REFLECTIONS 

ON 

THE    FORMATION 

AND   THE    DISTRIBUTION 

OF    RICHES 

BY 

TURCOT 
1 770 


THE    MACMILLAN   COMPANY 

LONDON:  MACMILLAN  &  CO.,  Ltd. 
191 1 

All  rights  reserved 


Copyright,  1898, 
By   the   MACMILLAN   COMPANY. 


Set  up  and  electrotyped.     Published  1898.     Reprinted 
January,  1911. 


ÏTorbjoaîi  ^reas 

J.  8.  Gushing  Co.  —  iîerwick  &  Smith  Co. 

Norwood,  Mass.,  U.S.A. 


n  «^ 

153 


Anne  Robert  Jacques  Turcot,  baron  d'Aulne,  was  bom 
in  Paris  on  May  lo,  1727.  He  came  of  a  branch  of  an  old 
noble  family  of  Normandy,  which  had  for  two  or  three  gen- 
erations furnished  the  state  with  able  administrative  officials  : 
his  grandfather  had  served  as  an  Intendant  ;  his  father  had 
occupied  high  judicial  positions,  and  presided  for  a  time 
over  the  municipal  government  of  Paris  as  Prévôt  des  Mar- 
chands. He  received  his  early  education  at  the  Collège 
Louis-le-Grand  and  the  Collège  du  Plessis  ;  and  then,  being 
destined  as  a  younger  son  for  the  ecclesiastical  profession, 
he  entered  upon  his  theological  studies  at. the  Séminaire  de 
Saint-Sulpice,  and  received  the  degree  of  bachelor  of  theol- 
ogy in  1747.  In  1748  he  was  admitted  to  residence  in  the 
Maison  de  Sorbonne  ;  and,  in  December  1 749,  he  was 
elected  to  thelîôhôràfy  office  of  Prieur  for  the  ensuing  year. 
Early  in  1751  he  changed  his  plans,  and  determined  to 
enter  the  judicial  and  administrative  service.  In  January 
1752  he  was  appointed  Substitut  du  Procureur  Général;  in 
December,  Conseiller  au  Parlement  de  Paris;  in  March 
1753,  Maître  des  Requêtes.  His  duties  for  the  next  eight 
years  were  chiefly  judicial  ;  but  in  1755  and  1756  he  accom- 
panied Gournay,  the  Intendant  du  Commerce,  in  his  official 
tours  of  inspection  through  the  south  and  west  of  the 
kingdom. 

In  August  1 76 1  he  was  appointed  Intendant  of  the  Gén- 
éralité of  Limoges,  and  held  that  office  till  the  middle  of 
1774.     During  his  administration  he  reformed  the  method 


726825 


M 


VI 

of  collecting  the  Taille,  substituted  a  money  payment  for  the 
x^orced  labour  of  the  Corvée,  brought  about  the  free  circula- 
tion of  corn  within  the  Généralité,  and  estabUsked  ar  system 
of  pooj-relie'f.  In  his  occasional  visits  to  Paris,  he  con- 
tracted a  friendship  with  David  Hume  (secretary  to  the 
English  Embassy  from  1763  to  1766),  and  made  the  ac- 
quaintance of  Adam  Smith  (in  Paris  from  Christmas  1765 
to  October  1766).  It  was  during  1766  that  Turgot  wrote 
his  Reflections  (for  which  see  infra). 

Upon  the  accession  of  Louis  XVI,  Turgot  was  invited  to 
join  the  new  reforming  ministry.  After  a  brief  tenure  of  the 
Ministry  of  Marine  (July  20-August  24,  1774),  he  was  ap- 
pointed Contrôleur  Général  des  Finances.  His  short  minis- 
try of  two  years  forms  one  of  the  best  known  episodes  in  the 
history  of  France.  The  most  important  of  his  measures 
were  the  establishment  of  freedom  in  the  internal  corn- 
trade,  the  substitution  for  the  Corvée  of  a  tax  to  which  the 
"privileged  classes  were  also  to  contribute,  and  the  abolition 
of  the  Jurandes,  or  corporations  of  crafts.  Turgot's  edicts 
aroused  the  most  determined  opposition  from  the  nobility, 
the  magistracy,  and  all  those  interested  in  the  maintenance 
of  existing  conditions  ;  and  Louis  yielded  to  the  remon- 
strances of  the  court  and  of  Marie  Antoinette,  and  dismissed 
Turgot,  May  12,  1776.  His  measures  were  at  once  recalled, 
—  to  be  re-enacted  by  the  legislatures  of  the  Revolution. 
Turgot  devoted  the  years  of  retirement  to  literary  labours  ; 
and  died  on  March  18,  1781. 

The  only  economic  writings  of  Turgot,  other  than  the 
Reflections,  published  during  his  lifetime,  would  seem  to 
have  been  the  Questions  importantes  sîir  le  commerce,  1755 
(translated  from  the  English  of  Tucker) ,  and  two  articles  on 
Foires  et  Marchés  and  Fondations  in  the  Encyclopœdie,  1 756. 


vil 

He  drew  up,  however,  a  large  number  of  Mémoires  on  vari- 
ous economic  topics,  some  of  them  addressed  to  his  official 
superiors  apropos  of  his  government  of  Limoges  :  his  meas- 
ures of  reform  while  Intendant  were  all  explained  and  justi- 
fied by  him  in  circular  letters  and  other  papers  addressed  to 
the  pubhc  :  and  the  edicts  of  his  ministry  were  preceded  by 
elaborate  expositions  of  the  principles  involved.  All  these, 
together  with  his  Eloge  de  Goiirîiay,  written  in  1759,  were 
published,  under  the  editorship  of  Du  Pont  de  Nemours, 
in  the  Œuvres  de  Turgot,  \n  9  vols.,  1809-1811;  and  re- 
printed with  additions  in  the  2-volume  edition  of  his  Œiwres, 
edited  by  Daire  and  Dussard,  in  1844,  for  the  Guillaumin 
Collection  des  Principaux  Economistes.  The  volume  entitled 
Turgot  :  Administration  et  Œuvres  Economiques,  edited  by 
M.  Robineau,  1889,  in  the  Petite  Bibliothèque  Economique, 
contains  the  Réflexions,  the  Eloge,  the  Edit  de  Suppression 
des  Corvées,  and  the  Edit  de  Suppressio7i  des  Jura7ides.  In 
Mr.  W.  Walker  Stephens'  Life  and  Writings  of  Turgot,  1895, 
will  be  found  a  translation  of  the  Eloge,  and  of  a  good  many 
miscellaneous  extracts  from  Turgot's  writings. 

The  main  source  for  the  biography  of  Turgot  is  Du  Pont 
de  Nemours,  Mémoires  sur  la  vie  et  les  ouvrages  de  3f.  Tur- 
got, 1 782.  The  Vie  de  Turgot,  by  his  friend  Condorcet,  1 786, 
(translated  into  English  1787),  gives  some  additional  par- 
ticulars. Of  writings  concerning  Turgot  a  list  will  be  found 
in  Dr.  Lippert's  article  in  the  Handworterbuch  der  Staats- 
wissenschaften,  vol.  vi.  Among  the  most  notable  of  these, 
from  the  eminence  of  the  writers,  are  the  articles  of 
M.  Léonce  de  Lavergne  in  Les  Economistes  Frajiçais  du 
dix-huitième  siècle,  1870,  and  of  Mr.  John  Morley  in  Critical 
Miscellatiies  1877,  and  the  brief  life  by  M.  Léon  Say,  1887, 
translated    into    English   by   Mr.   Gustave   Masson,    1888. 


VIU 

Among  the  very  few  really  impartial  estimates  of  Turgot's 
place  in  French  history,  the  reader  may  be  referred  to 
M,  Albert  Sorel's  L Europe  et  la  Révolution  Française,  1885, 
i,  pp.  209-213. 

The  Reflections  on  the  Productio7i  and  the  Distribution 
of  Riches  were  written  towards  the  close  of  1766  for  the 
benefit  of  two  young  Chinese,  who  having  been  educated  in 
France  were  returning  to  their  country  with  a  pension  from 
the  crown.  China  was  commonly  regarded  by  the  French 
economists  of  the  time  as  the  peculiar  home  of  enlightened 
government  (compare  de  Tocqueville,  L'Ancien  Régime, 
livre  III,  ch.  3)  ;  and  these  young  men  were  expected  to 
keep  their  European  patrons  informed  upon  the  internal 
affairs  of  their  country.  Turgot  drew  up  a  list  of  questions 
for  them  to  answer,  and  prepared  the  Reflections  to  enable 
them  the  better  to  understand  the  purpose  of  his  interro- 
gations (see  Appendix,  Excerpt  6).  In  1769  he  yielded 
to  the  insistence  of  Du  Pont  de  Nemours,  then  editing  the 
Ephémérides  du  Citoyen,  the  organ  of  the  Physiocratic  party, 
who  was  in  chronic  want  of  copy,  and  gave  him  the  Reflec- 
tions to  print.  They  appeared  in  the  numbers  for  No- 
vember and  December  1769,  and  January  1770;  which, 
however,  were  not  actually  issued  till  January,  February 
and  April  1770. 

It  has  recently  been  shewn  by  M.  G.  Schelle  (in  his  Du 
Pont  de  Nemours  et  V école  physiocratique,  1888,  pp.  126-129, 
and  in  an  article  in  the  Journal  des  Economistes  for  July 
1888),  that  Du  Pont  took  upon  himself,  without  consulting 
the  author,  to  modify  the  text  in  more  than  one  direction. 
In  §  xvii  {i7ifra,  p.  16)  the  adjectives  "human"  and 
"  civil  "  were  omitted  before  "  conventions  "  and  "  laws  "  ; 
and  to  the  words  "  after  they  ceased   to  cultivate   them  " 


IX 

were  added,  "And  this  as  the  price  of  the  original  agri- 
cultural advances,  by  which  they  have  brought  these  soils 
into  a  condition  to  be  cultivated,  and  which,  so  to  speak, 
are  incorporated  with  the  soil  "  ("Et  cela  pour  prix  des 
avances  foncières  par  les  quelles  ils  ont  mis  ces  terreins  en 
état  d'être  cultivées,  et  qui  se  sont  pour  ainsi  dire  incor- 
porées au  sol  même").  Out  of  Turgot's  one  section  (xxi) 
on  cultivation  by  slaves,  Du  Pont  made  three  ;  his  additions 
(more  than  equal  in  extent  to  Turgot's  own  text)  not  only 
emphasizing  the  moral  evil  of  slavery,  but  also  maintaining 
that  slave  labour  was  unprofitable  even  to  the  masters  :  and 
from  the  heading  and  opening  sentences  of  §  Iv  Du  Pont 
omitted  altogether  the  enumeration  of  slaves  among  move- 
able riches.  /Turgot  was  exceedingly  annoyed  (see  Appen- 
dix, Excerpts  7,  8)  ;  and  remonstrated  in  time  to  prevent 
the  third  instalment  from  being  tampered  with.  ")  But  Du 
Pont  could  not  allow  Turgot's  language  in  §  Ixxviii,  about 
saving  ("  l'épargne  ")  as  the  source  of  capital,  to  pass 
uncriticised  ;  and  accordingly  he  appended  a  long  note, 
urging  that  "  the  formation  of  capitals  arises  much  less  ,v_^ 
from  saving  out  of  the  expenditure  of  revenues  than  from  ! 
the  wise  employment  of  the  expenditure  "  (see  Appendix,  1 
Excerpt  9),  and  added  one  or  two  other  fussy  notes.  I 
Throughout  he  touched-up  the  style  in  minute  points.  ' 

Turgot  insisted  that  in  the  separate  issue  of  the  Reflec-  \ 
tions  which  was  about  to  be  made,  the  text  should  be  cor-  J 
rected,  and  an  erratum  inserted  drawn  up  by  himself.  This  ! 
was  done;  but  according  to  M.  Schelle  only  100  or  150  i 
copies  were  struck  off,  and  scarcely  one  has  survived.  A 
corrected  reprint,  issued  in  1788,  is  equally  rare.  Strangest  i 
of  all  is  the  fact  that  when,  in  1808,  Du  Pont  edited  Tur-  ; 
got's  Œuvres,  he  boldly  reprinted  his  old  text  of  the  Éphé- 


mérides  ;  and  this  was  copied  by  Daire  in  his  edition  of  1844. 
Not  till  1889  were  the  Reflections  accessible  as  originally 
written.  M.  Schelle  and  M.  Robineau  have  both  announced 
that  in  the  Reflections,  as  printed  by  the  latter  in  the  Turgot 
volume  of  the  Petite  Bibliothèque  Economique,  the  original 
text  has  been  re-established.  In  every  essential  point  this 
is  doubtless  the  case  ;  but  a  comparison  of  the  Robineau 
text  with  that  of  the  Ephémèrides  and  with  the  English 
translation  of  1793  about  to  be  mentioned,  raises  a  good 
many  curious  Httle  questions  as  to  Turgot's  exact  language 
which  cannot  at  present  be  answered.  A  really  critical 
edition  of  the  Reflections  would  come  with  good  grace  from 
the  inheritors  of  the  Turgot  tradition,  —  the  group  of  Parisian 
economists  associated  with  \\\q  Jotirnal  des  Economistes  and 
the  house  of  Guillaumin.  It  must  be  observed,  also,  that 
unless  the  manuscript  of  Turgot's  other  writings  published 
posthumously  by  Du  Pont  can  be  recovered,  they  must 
remain  under  some  suspicion. 

An  anonymous  English  translation,  made,  as  is  clear  from 
internal  evidence,  from  the  edition  of  1788,  appeared  in 
London  in  1 793  ;  and  this  was  reprinted  by  J.  R.  McCul- 
loch  in  1859  in  one  of  the  Overstone  volumes,  {^A  Select 
Collection  of  Scarce  afid  Valuable  Economical  Tracts'). 
The  original  intention  of  the  present  editor  was  merely  to 
reprint  this  translation  ;  but  upon  examination  this  was 
quickly  seen  to  be  out  of  the  question.  The  1 793  transla- 
tion is  fairly  good  for  the  first  few  paragraphs  ;  but  soon 
gross  blunders  begin  to  make  their  appearance,  e.g.  in 
§  XXV,  where  the  heading  "  Colonage  partiaire  "  is  trans- 
lated "  Partial  Colonization  "  !  As  it  proceeds  it  becomes 
worse,  until  in  the  second  half  there  are  many  paragraphs 
which  are  absolutely  unintelligible.     It  was  evidently  a  piece 


XI 

of  hack-work,  done  by  a  man  who  had  little  understanding 
of  the  course  of  Turgot's  argument.  McCuUoch  can  hardly 
have  read  it. 

The  present  editor  has,  accordingly,  ventured  on  a  new 
translation,  following  M.  Robineau's  text,  and  comparing  it 
with  that  of  the  Ephémérides,  —  for  the  loan  of  a  copy  of 
which  he  is  indebted  to  his  friend,  Professor  E.  R.  A,  Selig- 
man.  He  has  attempted  to  produce  something  like  the 
effect  of  Turgot's  style  ;  which  is,  indeed,  inelegant  and 
sometimes  rugged,  and  also  very  limited  in  vocabulary,  but 
yet  direct  and  clear,  the  style  pre-eminently  of  a  man  of 
affairs.  Turgot's  thought  is,  of  course,  abstract,  like  that 
of  the  group  to  which  he  belonged  ;  but  his  language  is 
not  as  abstract  as  that  of  economic  writing  has  since 
become  ;  and,  in  spite  of  the  occasional  awkwardness  of 
the  result,  the  translator  has  sought  to  retain  as  much  as 
possible  of  the  concreteness  of  Turgot's  expressions.  In 
this  attempt  some  help  has  been  derived  from  the  usage 
of  Adam  Smith.  Thus  "  richesses  "  has  been  rendered 
"riches,"  "la  société"  commonly  by  "the  society,"  and  so 
on.  Sometimes  a  word  like  "  denrée  "  is  used  first  in  a  nar- 
rower and  then  in  a  wider  sense,  and  therefore  differently 
rendered.  To  avoid  misrepresenting  our  author,  the  origi- 
nal French  has  been  given  in  a  note,  when  it  is  either  a 
technical  term,  or  used  with  more  than  one  shade  of  mean- 
ing, or  for  any  other  reason  noticeable.  The  punctuation 
in  the  Èphémèi'ides ,  (connecting,  for  instance,  two  or  three 
sentences  with  the  colon  or  semi-colon)  often  suggests  the 
connection  of  ideas  more  clearly  than  the  modern  texts,  and 
it  has  been  usually  followed  here,  except  where  a  printer's 
blunder  could  be  fairly  supposed.  In  the  use  of  capital  let- 
ters (which,  it  will  be  noticed,  are  far  fewer  in  the  third 


xu 

instalment),  and  in  various  trifles  of  typography,  the  print- 
ing of  the  Ephémérides  has  also  been  here  imitated,  in  the 
hope  of  keeping  something  of  the  eighteenth-century  flavour. 

The  Excerpts  from  Turgot's  Correspondence,  given  in  the 
Appendix,  will  be  found  to  throw  a  good  deal  of  light  on  his 
economic  theory.  Those  numbered  i,  3,  5,  were  printed  as 
long  ago  as  1849  t)y  J.  H.  Burton  in  Letters  of  Eminent 
Persotis  to  David  Hume  ;  while  the  letters  of  Hume,  from 
which  2  and  4  are  taken,  have  only  of  late  years  seen  the 
light,  in  M.  Léon  Say's  David  Hume  :  Œuvre  Économique, 
1888,  (in  Petite  Bibliothèque  Economique^.  The  economic 
passages  form  a  small  part  of  the  whole  correspondence 
between  Turgot  and  Hume,  which  is  chiefly  concerned  with 
the  affairs  of  Rousseau.  Hume's  interesting  letter  to  Mo- 
rellet,  (of  which  excerpt  10  is  a  fragment)  is  also  printed  in 
M.  Say's  Hume.  Excerpts  6-9  are  taken  from  previously 
unprinted  letters  of  Turgot  given  by  M.  Schelle  in  the  article 
in  the  Journal  des  Economistes  and  the  book  on  Du  Pont 
de  Nemours  already  mentioned.  The  latter  is  an  indispen- 
sable source  of  information  for  all  students  of  the  Physio- 
cratic  school. 

The  translator  may  be  permitted  to  add  two  observations 
at  the  end  of  his  work.  The  first  is  that,  in  spite  of  Tur- 
got's disHke  for  the  narrow  sectarian  spirit  of  the  circle 
that  surrounded  Quesnay,  and  the  freedom  with  which  he 
expressed  his  dissent  from  them  on  minor  points  of  doc- 
trine, nevertheless  his  whole  economic  thought  .wasdorni- 
nated  by  the  fundamental  Physiocratic  ideas  ;  and  these  find 
in  the  Reflectiojis  their  briefest  and  most  lucid  expression. 
The  second  is  suggested  by  the  recent  discussion  as  to  the 
relation  between  Adam  Smith  on  the  one  side,  and  Turgot, 
or  the  whole  Physiocratic  school,  on  the  other.    This  discus- 


XIU 

sion,  though  it  has  received  of  late  some  valuable  contribu- 
tions, (S.  Feilbogen,  Smith  und  Turgot,  1892;  E.  Cannan, 
Intro  du  cti 071  to  his  edition  of  Smith's  Lectures,  1896  ;  H. 
Higgs  in  Economic  Journal,  December  1896  ;  and  W.  Has- 
bach  in  Political  Science  Quarterly,  January  1898)  cannot 
be  regarded  as  concluded.  It  is  now  generally  recognized 
thr.t  there  are  not  inconsiderable  portions  of  Adam  Smith's 
treatise  of  a  distinctly  Physiocratic  character.  And  it  will 
probably  be  found  that  the  contribution  of  Physiocracyjto 
the  production  of  the  Wealth  of  Nations  was  even  greater 
in  two  other  ways,  —  in  raising  questions  in  Adam  Smith's 
mind,  which  left  to  himself  he  would  never  have  put,  and 
in  providing  him  with  a  phraseology  which  of  himself  he 
would  never  have  hit  upon. 


CONTENTS 


REFLECTIONS  ON  THE  ORIGIN  AND  THE  DISTRIBUTION 
OF   RICHES. 

SECTION  PAGE 

Introductory  Note  by  Du  Pont  de  Nemours i 

I.   Inipossibility  of  ComtJierce  upon  the  supposition  of  an  equal 
division  of  lands,  tvhercin  every  man  should  possess  only 

what  was  necessary  for  his  own  support 3 

II.  The  above  hypothesis  has  never  existed,  àf  could  not  have 
continued.  The  diversity  of  soils  â^  the  multiplicity  of 
wants  lead  to  the  exchange  of  the  products  of  the  land  for 
other  products 3 

III.  The  products  of  the  land  require  preparations  long  àr"  diffi- 

cult, in  order  to  render  them  fit  to  satisfy  the  wants  of 
man 5 

IV.  The  necessity  of  these  preparations  brings  about  the  exchange 

of  produce  for  labour ,     .     .     .       6 

V.  Pre-eminence  of  the  Husbandman  who  produces  over  the 
Artisan  who  works  up  materials.  The  Husbandman  is 
the  first  mover  in  the  circulation  of  labours  ;  it  is  he  who 
causes  the  land  to  produce  the  ivages  of  all  the  Artisans  .  7 
VI.  The  wages  of  the  IVorhman  are  limited  to  his  subsistence  by 
the  competition  among  the  Workmen.     He  gets  only  his 

livelihood 8 

VII.    The  Husbandman  is  the  only  person  whose  labour  produces 
something  over  and  above  the  wages  of  the  labour.     He  is 

therefore  the  sole  source  of  all  wealth 9 

VIII.  First  divisioti  of  the  society  into  two  classes  :  the  one  pro- 
ductive, or  that  of  the  Cultivators  ;  the  second  stipendiary, 
or  that  of  the  Artisans lO 

XV 


CONTENTS 


SECTION  PAGE 

IX.    In  the  first  ages  the  Proprietor  cannot  have  been  distin- 
guished frotn  the  Cultivator lo 

X.    Progress  of  the  society  ;  all  the  lands  have  a  master    .     .     ii 
XI.    7'he  Proprietors  begin  to  be  able  to  throw  the  labour  of 

cultivatioti  upon  hired  Cultivators 12 

XII.    Inequality  in  the  division  of  properties  :  causes  which  , 

render  that  i7ievitable 12 

XIII.  Consequence  of  this  inequality  :   the  Cultivator  distin- 

guished from  the  Proprietor 13 

XIV.  Division  of  the  produce  between  the  Cultivator  à^  the 

Proprietor.     Net  produce  or  revenue 14 

XV.   New  division  of  the  Society  into  three  classes,  of  Culti- 
vators, of  Artisans  ô^  of  Proprietors  ;  or  the  produc- 
tive class,  the  stipendiary  class  and  the  disposable  class  14 
XVI.    Resemblance  between  the  two  working  or  non-disposable 

classes 1 5 

XVII.    Essential  difference  betiveen  the  txvo  working  classes    .     .  16 
XVIII.    This  difference  justifies  their  being  distinguished  as  pro- 
ductive 0^  barren  class  respectively 1 7 

XIX.    How  the  Proprietors  are  able  to  draw  the  revenue  frotn 

their  lands 17 

XX.   First  method  :  cultivation  by  men  who  are  paid  wages  .  18 

XXI.    Second  method  :  ctdtivation  by  slaves 18 

XXII.    Cultivation  by  slaves  cannot  continue  in  the  great  Socie- 
ties        20 

XXIII.  Bondage  to  the  soil  follows  slavery  properly  so-called  .     ,  20 

XXIV.  Vassalage  succeeds  bondage  to  the  soil,  àf  the  slave  be- 

comes proprietor.      Third  method  ;    alienation  of  the 

estate  in  return  for  a  fixed  payment 21 

XXV,   Fourth  jnethod  :  the  metayer  system 22 

XXVI.  Fifth  method  :  farming  or  the  letting-out  of  land   ...  23 
XXVII.    This  last  method  is  the  most  advantageous  of  all,  but  it 

presupposes  a  country  already  rich 24 

XXVIII.   Recapitulation  of  the  different  tnethods  of  making  lands 

prodtictive 2C 

XXIX.    Of  capitals  in^general,  and  of  the  revenue  of  money  .     .  2) 

XXX.    Of  the  îtse  of  gold  and  silver  in  commerce 27 


CONTENTS 


SECTION 

XXXI. 

XXXII. 
XXXIII. 


XXXIV. 


XXXV. 


XXXVI. 


XXXIX. 


XL. 
XLI. 

XLII. 


PAGE 

Birth  of  Commerce.  Prineiple  of  the  valuation  of 
commercial  things 28 

How  the  current  value  establishes  itself  in  the  exchange 
of  commodities 29 

Commerce  gives  to  each  article  of  commerce  a  current 
value,  with  respect  to  every  other  article  ;  whence  it 
follows  that  every  article  of  comtnerce  is  the  equiva- 
lent of  a  certain  quantity  of  every  other  article,  ér' 
can  be  regarded  as  a  pledge  which  represents  it    .     .     30 

£ach  article  of  commerce  can  set've  as  the  scale  or  com- 
mon measure  wherewith  to  compare  the  value  of  all 
others 31 

Every  coinmodity  does  not  present  an  equally  con- 
venient scale  of  values.  The  preference  therefore 
has  necessarily  been  given  in  practice  to  those  which, 
not  being  susceptible  of  a  great  difference  in  quality, 
have  a  value  principally  relative  to  the  number  or 
the  quantity 32 

The  want  of  an  exact  correspondence  between  the  value 
and  the  number  or  quantity  has  been  made  up  for 
by  a  mean  valuation,  which  becomes  a  sort  of  ideal 
money 33 

Examples  of  these  mean  valuations  which  become  an 
ideal  expression  of  values 34 

Every  commodity  is  a  pledge  representing  all  the  arti- 
cles of  Comtnerce  ;  but  it  is  more  or  less  convenient 
in  practice,  according  as  it  is  more  or  less  easy  to 
transport  ô^  to  keep  without  alteration 35 

Every  commodity  has  the  two  essential  properties  of 
money,  those  of  measuring  and  representing  all 
value  ;  âf,  in  this  sense,  every  commodity  is  money     36 

Reciprocally,  all  ?noney  is  essentially  merchandise  .     .     36 

Different  articles  have  been  able  to  serve  âr»  have  served 
as  ordinary  money 37 

The  Metals,  and  especially  gold  and  silver,  are  more 
fit  for  this  purpose  than  any  other  substance  ;  &" 
■why 37 


CONTENTS 


SECTION  PAGE 

XLIII.  Gold  (Sr»  silver  are  constituted,  by  the  nature  of  things, 
7noney,  dr"  universal  nioiiey  ;   independently  of  all 

convention  dr"  of  all  law 39 

XLIV.    The  employment  of  the  other  metals  for  these  purposes 

is  only  subsidiary 39 

XLV.    The  use  of  gold  dr»  silver  as  money  has  augmented 

their  value  as  niaterials 40 

XLVI.  Variations  in  the  value  of  gold  àr'  of  silver,  compared 
with  the  other  articles  of  Commerce  6^  with  one  an- 
other      40 

XLVII,    The  ctistom  of  payments  in  tnoney  has  given  rise  to  the 

distinction  between  the  Buyer  àf'  the  Seller      ...     42 
XLVIII.    The  practice  of  using  tnoney  has  greatly  facilitated  the 
separation  of  different  labours  among  the  different 

Members  of  Society 42 

XLIX.  Concerning  the  reserve  of  annual  products,  accumu- 
lated to  form  capitals 43 

L.    Moveable  riches.     Accumulation  of  money     ....     43 
LI.    Moveable  riches  are  an  indispensable  prerequisite  for 

all  lucrative  works 44 

LII.    Necessity  of  advances  in  agriculture 45 

LIII.  First  advances  furnished  by  the  land  while  still  uncul- 
tivated  46 

LIV.    Cattle,  moveable  wealth  even  before  the  cultivation  of 

the  lands 47 

LV.   Another  kind  of  moveable  wealth  àr'  of  advances  of 

agriculture  :  the  slaves 47 

LVI.    Moveable  riches  have  a  value  exchangeable  against  the 

land  itself 48 

LVII.  Valuation  of  lands  in  accordaftce  with  the  proportion 
which  the  revenue  bears  to  the  amount  of  moveable 
wealth,  or  the  value,  for  which  they  are  exchanged  : 
this  proportioti  is  what  is  called  the  penny  of  the 

price  of  lands 49 

LVIII.  Every  capital  in  money,  or  every  sum  of  value  what- 
ever it  may  be,  is  the  equivalent  of  a  piece  of  land 
producing  a  revenue  equal  to  a  definite  fraction  of 


CONTENTS 


SECTION  FAGS 

that  sum.     First  employment  of  capitals.     Purchase 

of  an  estate  of  land 50 

LIX.    Another    employment    of   money,    in    the    advances   of 

manufacturing  and  industrial  enterprises     .     .     .     .     51 
LX.    Further  explanations  as  to  the  employment  of  the  ad- 
vance  of  capitals   in   enterprises   of  industry,  as  to 
their  return,  as  to  the  profit  they  ought  to  yield  ...     52 
LXI.    Subdivision  of  the  industrial  stipendiary  Class  into  capi- 
talist Undertakers  and  simple  Workmen 54 

LXII.  Another  employment  of  capitals,  in  advances  for  the  en- 
terprises of  Agriculture.  Explanations  as  to  the  use, 
the  return,  à^  the  indispensable  profits  of  capitals  in 

the  enterprises  of  Agriculture 54 

LXIII.  The  competition  of  Capitalist  Undertakers  in  agriculture 
establishes  the  ctirrent  price  of  leases,  àr"  farming  on  a 

large  scale 56 

LXIV.    The  lack  of  Capitalist  Undertakers  restricts  agriculture 

to  the  small-farming  method 57 

LXV.  Subdivision  of  the  Class  of  Cultivators  into  Undertakers 
or  Farmers  âr'  mere  Wage-earners,  zvhether  Servants 

or  Day-labourers 58 

LXVI.  Fourth  employment  of  capitals,  in  advances  for  under- 
takings in  Commerce.  Necessity  of  the  interposition 
of  Merchants,  properly  so-called,  betiveen  the  Producers 

of  the  commodity  ô^  (he  Consutners 58 

LXVII.  Different  orders  of  Merchants.  All  have  this  in  com- 
mon, that  they  purchase  to  sell  agaiji,  and  that  their 
business  depends  tipon  advances  which  need  to  return 
with  profit  in  order  to  be  once  more  put  into  the  under- 
taking      60 

LXVIII.    True  idea  of  the  circulation  of  money 62 

LXIX.  All  economic  undertakings,  particularly  those  of  manu- 
facture and  commerce,  cotild  not  fail  to  be  extretnely 
limited  before  the   introduction  of  gold  &'  silver  in 

commerce 63 

LXX.  Capitals  being  as  necessary  to  all  tuidertakings  as  labour 
and  industry,  the  industrious  man  is  ready  to  share 
the  profits  of  his  undertaking  with  the  Capitalist  who 
furnishes  him  with  the  funds  of  which  he  has  need      .     64 


CONTENTS 


SECTION 

LXXI. 

LXXII. 
LXXIII. 
LXXIV. 

LXXV. 
LXXVI. 


LXXVII. 


LXXVIII. 
LXXIX. 

LXXX. 


LXXXI. 

LXXXII. 
LXXXIII. 


PAGE 

Fifth  employment  of  capitals  :  the  loan  upon  interest. 
Nature  of  the  loan 65 

False  ideas  as  to  lending  tipoti  interest 67 

Errors  of  the  Schoolmen  refuted 68 

True  foundation  of  the  interest  of  money     ....     71 

Reply  to  an  objection 72 

The  rate  of  interest,  like  that  of  merchandise  gener- 
ally, ought  to  be  fixed  by  nothing  but  the  Course  of 
trade 74 

Money  has  two  different  valuations  in  commerce  : 
the  one  expresses  the  quantity  of  money  we  give  to 
procure  the  different  sorts  of  commodities  ;  the  other 
expresses  the  relation  of  a  sum  of  money  to  the 
interest  it  procures  in  accordance  with  the  course 
of  commerce 74 

These  two  valuations  are  itidependent  of  each  other, 
as' are  governed  by  quite  different  principles     .     .     75 

In  the  valuation  of  money  with  regard  to  commodi- 
ties it  is  the  money  considered  as  metal  that  is  the 
subject  of  the  estimate.  In  the  valuation  of  the 
"penny  "  of  money,  it  is  the  use  of  the  money  dur- 
ing a  definite  time  that  is  the  subject  of  the  estimate     'j'j 

The  price  of  interest  depends  immediately  upon  the 
relation  between  the  demand  of  the  borrowers  and 
the  offer  of  the  lenders  ;  &=  this  relatioft  depends 
chiefly  on  the  quantity  of  moveable  riches  accumu- 
lated, by  the  saving  of  revenues  as'  of  annual  prod- 
ucts, to  form  capitals  withal,  whether  these  capitals 
exist  in  money  or  in  any  other  kind  of  effects  hav- 
ing a  value  in  commerce 78 

The  spirit  of  economy  in  a  nation  continually  aug- 
ments the  sum  of  capitals;  luxury  continually 
tends  to  destroy  them 79 

The  fall  in  the  rate  of  interest  proves  that,  in  general, 
economy  has  prevailed  over  luxury  in  Europe  .     .     80 

Recapitulation  of  the  five  different  methods  of  em- 
ploying capitals Si 


CONTENTS 


SECTION  PAGE 

LXXXIV.  The  influence  on  one  another  of  the  different  employ- 
ments of  money 8i 

LXXXV.    Aloney  invested  in  land  is  bound  to  bring  the  least     .     82 
LXXXVI.    Money  placed  on  loan  is  bound  to  bring  rather  more 
than  the  revenue  of  latided  estates  acquired  with 

an  equal  capital 82 

LXXXVII.    Money  invested  in  agricultural,  manufacturing,  dr» 
commercial  undertakings  is  bound  to  bring  more 

than  the  ijiterest  of  money  on  loati 83 

LXXXVIII.  Nevertheless  the  products  of  these  different  employ- 
ments are  limited  by  one  another,  àr',  notwith- 
standing their    inequality,    preserve   a    kind  of 

equilibrium 83 

LXXXIX.  The  current  interest  of  money  is  the  thermometer  by 
which  one  may  judge  of  the  abundance  or  scarcity 
of  capitals  ;  it  is  the  measure  of  the  extent  a  Nation 
can  give  to  its  enterprises  in  agriculture,  manu- 
facture &'  commerce 8$ 

XC.    Influence  of  the  rate  of  interest  of  money  on  all gaitt- 

ful  undertakings 86 

XCI.    The  total  wealth  of  a  nation  is  composed:  ist,  of  the 

net  revenue  of  all  the  estates  in  land  multiplied  by 

the  rate  at  ivhich  land  is  sold;  2d,  of  the  su7n  of 

all  the  moveable  riches  existing  in  the  nation     .     .     86 

XCII.    The  amount  of  capitals  on  loan  cannot  be  included  in 

this  total  without  being  reckoned  tivice  over    ...     88 
XCIII.    In  which  of  the  three  classes  of  the  Society  the  capital- 
ist lenders  of  money  are  to  be  placed     90 

XCIV.    The  capitalist  lender  of  money  belongs  to  the  disposa- 
ble class,  so  far  as  his  person  is  concerned     ...     90 
XCV.    The  interest  drawn  by  the  lender  of  money  is  disposa- 
ble, so  far  as  concerns  the  use  he  can  make  of  it      .     92 
XCVI.    The  interest  of  money  is  not  disposable  in  this  sense, 
—  that  the  State   can  without  harm  appropriate 

part  of  it  for  its  wants 92 

XCVII.    Objection 94 

XCVIII.   Answer  to  the  objection 94 


i  CONTENTS 

SECTION  PACK 

XCIX.    There   exists  no  truly  disposable  revenue  in  a  State 

except  the  net  produce  of  lands 95 

C.  The  land  has  also  furnished  the  whole  amount  of  move- 
able riches,  or  capitals,  ift  existence,  àr'  these  are 
formed  only  by  part  of  its  produce  being  saved  every 

year 9^ 

CI.  Although  money  is  the  immediate  subject  of  saving,  and 
is,  so  to  speak,  the  first  material  if  capitals  zvhen  they 
are  being  fortJied,  specie  forms  but  an  almost  inap- 
preciable part  of  the  sum  total  of  capitals     ....     98 


APPENDIX. 

EXCERPTS  FROM  TURGOT'S  CORRESPONDENCE. 

Tttrgot  to  Hume,  July  2T„  i-j66 loi 

Hume  to  Turgot,  Aug.  ^,  1766 102 

Turgot  to  Hume,  Sept.  "J,  l-jbb 102 

Hufne  to  Turgot,  undated 104 

Turgot  to  Htime,  Afarch  2<-„  I'jb'] 106 

Turgot  to  Du  Pont,  December  9,  1 766 1 10 

Turgot  to  Du  Pont,  Ftbruary  2,  1770 ill 

Turgot  to  Du  Pont,  February  20,  \']']0 HI 

Turgot  to  Du  Pont,  March  2T),\-]']0 112 

Hume  to  Morellet,  July  10,  1769 1 12 


[Introductory  Note  by  Du  Pont  de  Nemours, 
in  the  Ephemerides  for  Nov.  1769,  p.  12.] 

We  have  long  begged  the  Author  of  the  following  work 
to  let  us  have  it  to  enrich  our  Periodical,  He  was  never 
ready  to  consent,  because  he  had  7iot  given  the  last  touch  to 
the  exposition  of  his  reflections  ;  because,  throwing  them  on 
paper,  three  years  ago,  very  hastily  and  for  a  particular 
purpose,  he  approaches  the  subject  iti  a  manner  which  seems 
to  him  7iot  sufficiently  direct  ;  because,  as  a  conseçuence,  he 
has  been  obliged  sometimes  to  repeat  himself  ;  and  because 
it  seems  to  hi?n  that  thei-eby  he  gives  occasion  to  objections 
which  could  easily  have  been  forestalled  if  the  subjects  had 
been  presented  in  a  more  systematic  fashion.  It  is  the 
Author  himself  who  has  so  severely  criticised  his  perform- 
ance, whenever  we  have  spoken  to  him  about  it  ;  and  we 
doubt  not  that  he  would  really  have  been  quite  capable  of 
giving  it  a  higher  degree  of  perfection.  Yet  as  important 
occupatiofis,  from  which  he  cannot  be  released,  leave  him 
too  little  leisure  for  it  to  be  possible  for  him  to  irckon 
upon  the  time  which  would  be  necessary  to  arrive  at  what 
would  satisfy  himself  ;  and  since,  even  in  the  condition  in 
which  the  refiectio7is  now  are,  they  seem  to  us  to  compose 
a  Work  that  is  very  interesting,  very  fruitful,  and  very 
worthy  of  the  important  subject  of  which  they  treat  ;  we 
have  insisted  upoîi  his  giving  us  permission  to  place  them 
in  our  Collection  ;  and  he  has  finally  granted  to  friendship 
the  sacrifice  he  had  always  refused  to  our  arguments. 

B  I 


Reflections  on  the  formation  &  the  distribu- 
tion of  riches/  by  Mr.  X. 

§.   FIRST. 

Impossibility  of  Commerce  tipoîi  the  supposition  of  an  equal 
division  of  lands,  whereifi  every  man  should  possess  only 
what  was  necessary  for  his  own  support. 

If  the  land  were  so  distributed  among  all  the  inhabitants 
of  a  ccfuntry  that  each  of  them  had  precisely  the  quantity 
of  it  necessary  for  his  support  and  nothing  more,  it  is  evi- 
dent that,  all  being  equal,  no  one  would  be  willing  to  work 
for  others.  No  one,  besides,  would  possess  anything  with 
which  to  pay  for  the  labour  of  another  ;  for  each,  having 
only  as  much  land  as  he  needed  to  produce  his  subsistence, 
would  consume  all  that  he  had  gathered,  and  would  have 
nothing  that  he  could  exchange  for  the  labour  of  the 
others. 

§.  II. 

The  above  hypothesis  has  never  existed,  à^  could  not  have 
cofitinued.  The  diversity  of  soils  &^  the  multiplicity  of 
watits  lead  to  the  exchange  of  the  products  of  the  land 
for  other  products. 

This  hypothesis  can  never  have  existed,  because  the  lands 
have  been  cultivated  before  they  have  been  divided  ;  that 

1  Des  richesses. 

3 


4  REFLECTIONS   0  /  THE  FORMATION 

very  cultivation  having  been  the  sole  motive  for  division 
and  for  the  law  which  assures  to  each  his  property.  Now 
the  first  who  have  cultivated  have  probably  cultivated  as 
much  ground  as  their  forces  permitted,  and  consequently 
more  than  was  necessary  for  their  support. 

Even  if  this  state  could  have  existed,  it  could  not  possibly 
have  been  durable  ;  each  man,  as  he  got  from  his  field 
nothing  but  his  subsistence,  and  had  nothing  wherewith  to 
pay  the  labour  of  the  others,  could  only  supply  his  other 
wants  in  the  way  of  shelter,  clothing,  etc.,  by  his  own  labour  ; 
and  this  would  be  almost  impossible  ;  every  piece  of  land 
by  no  meafis  producwg  everything. 

He  whose  land  was  only  fit  for  grain  and  would  produce 
neither  cotton  nor  hemp  would  be  without  cloth  where- 
with to  clothe  himself.  Another  would  have  a  piece  of 
land  fit  for  cotton  which  would  not  produce  grain.  A  third 
would  be  without  wood  wherewith  to  warm  himself,  while 
a  fourth  would  be  without  grain  wherewith  to  feed  himself. 
Experience  would  soon  teach  each  what  was  the  kind  of 

1  product  for  which  his  land  would  be  best  adapted,  and  he 
^  would  limit  himself  to   the   cultivation  of  that  particular 
crop,  in  order  to  procure  for  himself  the   things   he  was 

,  devoid  of  by  means  of  exchange  with  his  neighbours  ;  and 
these,  having  in  their  turn  made  the  same  reflections,  would 
have  cultivated  the  crop^  best  suited  to  their  field  and 
abandoned  the  cultivation  of  all  the  others. 

1  La  denrée. 


AND    THE  DISTRIBUTION  OF  RICHES  5 

§.   III. 

The  products  of  the  la?id  require  preparations  long  6f  diffi- 
cult,  in  order  to  render  them  fit  to  satisfy  the  wants  of  man. 

The  crops  which  the  land  produces  to  satisfy  the  differ- 
ent wants  of  man  cannot  serve  that  purpose,  for  the  most 
part,  in  the  state  in  which  nature  gives  them  ;  they  must 
undergo  various  changes  and  be  prepared  by  art.  Wheat 
must  be  converted  into  flour  and  then  into  bread  ;  hides 
must  be  tanned  or  dressed  ;  wool  and  cotton  must  be  spun  ; 
silk  must  be  drawn  from  the  cocoons  ;  hemp  and  flax  must 
be  soaked,  peeled,  and  spun  ;  next,  different  textures  must 
be  made  from  them  ;  and  then  they  must  be  cut  and  sewn 
into  garments,  foot-gear,  etc.  If  the  man  who  causes  his 
land  to  produce  all  these  different  things  and  uses  them  to 
supply  his  wants  were  himself  obliged  to  put  them  through 
all  these  intermediate  stages,  it  is  certain  that  he  would 
succeed  very  badly.  The  greater  part  of  these  preparations 
demand  an  amount  of  care,  of  attention,  of  long  experience, 
such  as  are  only  to  be  acquired  by  working  continuously 
and  on  a  great  quantity  of  materials.  Take  for  example 
the  preparation  of  hides  ;  what  labourer  could  attend  to  all 
the  details  necessary  in  this  operation,  which  lasts  several 
months  and  sometimes  several  years?  If  he  could,  would 
he  be  able  to,  for  a  single  hide?  What  loss  of  time,  of 
space,  of  material,  which  might  have  served  either  at  the 
same  time  or  successively  to  tan  a  great  quantity  of  hides  ! 
But  even  should  he  succeed  in  tanning  a  single  hide,  he 
only  needs  one  pair  of  shoes  ;  what  shall  he  do  with  the 
rest  ?    Shall  he  kill  an  ox  to  have  this  pair  of  shoes  ?     Shall 


6  REFLECTIONS   ON   THE   FORMATION 

he  cut  down  a  tree  to  make  himself  a  pair  of  sabots?  One 
might  say  the  same  thing  concerning  all  the  other  wants 
of  each  man,  who,  if  he  were  reduced  to  his  own  field  and 
his  own  labour,  would  consume  much  time  and  trouble  to 
be  very  badly  equipped  in  every  respect,  and  would  culti- 
vate his  land  very  badly. 

§.   IV. 

The  necessity  of  these  preparations  brings  about  the  exchange 

of  produce  for  ladoi/r. 

The  same  motive  which  has  established  the  exchange  of 
crop  for  crop  between  the  Cultivators  of  different  kinds 
of  soil  must,  then,  have  necessarily  brought  about  the 
exchange  of  crop  for  labour  between  the  Cultivators  and 
another  part  of  the  society,  which  shall  have  preferred  the 
occupation  of  preparing  and  working  up  the  produce  of 
the  land  to  that  of  growing  it.  [Everyone  profited  by  this 
arrangement,  for  each  by  devoting  himself  to  a  single  kind 
of  work  succeeded  much  better  in  it.j  The  Husbandman^ 
obtained  from  his  field  the  greatest  amount  of  produce 
possible,  and  procured  for  himself  much  more  easily  all 
the  other  things  he  needed  by  the  exchange  of  his  surplus 
than  he  would  have  done  by  his  own  labour.  The  Shoe- 
maker, by  making  shoes  for  the  Husbandman,  obtained 
for  himself  a  part  of  the  latter's  harvest.  Each  workman 
laboured  to-  satisfy  the  wants  of  the  workmen  of  all  the 
other  kinds,  who,  on  their  side,  all  laboured  for  him. 

1  Le  Laboureur. 


AND    THE   DISTRIBUTION   OF  RICHES  7 

§•   V. 
Pre-eminence  of  the  Husbandman  who  produces  over  the 
Artisan  who  works  up  materials}     The  Husbandman  is 
the  first  mover'^  in  the  circulation  of  labours  ;  it  is  he  who 
causes  the  land  to  produce  the  wages'^  of  all  the  Artisaris. 

It  must  however  be  observed  that  the  Husbandman, 
furnishing  all  with  the  most  important  and  most  consid- 
erable article  of  their  consumption,  (I  mean  their  food 
and  also  the  materials  of  almost  every  industry)  has  the 
advantage  of  a  greater  independence.  His  labour,  in  the 
sequence^  of  the  labours  divided  among  the  different  mem- 
bers of  the  society,  retains  the  same  primacy,  the  same 
pre-eminence,  as  the  labour  which  provided  his  own  food 
had  among  the  different  kinds  of  labour  which,  when  he 
worked  alone,  he  was  obliged  to  devote  to  his  different  My 
kinds  of  wants.  We  have  here  neither  a  primacy  of  honour  * 
nor  of  dignity;  it  is  one  of  physical  necessity.  The  Hus- 
bandman, we  may  say  in  general  terms,  can  get  on  without 
the  labour  of  the  other  workmen,  but  no  workman  can 
labour  if  the  Husbandman  does  not  enable  him  to  live.  In 
this  circulation,  which,  by  the  reciprocal  exchange  of 
wants,  renders  men  necessary  to  one  another  and  forms  the" 
bond  of  the  society,  it  is,  then,  the  labour  of  the  Husband- 
man which  imparts  the  first  impulse.^  |What  his  labour^ 
causes  the  land  to  produce  beyond  his  personal  wants  is  the_ 
only  fund  for  the  wages  which  all  the  other  members  of  the 

1  Qui  prépare.  3  Le  salaire. 

2  Le  premier  mobile.  *  L'ordre. 
6  Donne  le  premier  mouvement. 


8  REFLECTIONS   ON   THE  FORMATION 

society  receive  in  exchange  for  their  labour.  I  The  latter,  in 
making  use  of  the  price  of  this  exchangETto  buy  in  their 
turn  the  products  of  the  Husbandman,  only  return  to  him 
exactly  what  they  have  received  from  him.  We  have 
here  a  very  essential  difference  between  these  two  kinds 
of  labours,  upon  which  it  is  necessary  to  lay  stress  in 
order  to  be  well  assured  of  the  evidence  on  which  it  rests, 
before  we  accept  the  innumerable  consequences  which  flow 
from  it. 

§.  VI. 

The  wages  of  the  Workman  ^  are  limited  to  his  subsistence  by 
the  coftipetition  among  the  Workmen.  He  gets -oJity'Tiis 
livelihood? 

The  mere  Workman,  who  has  only  his  arms  and  his  in- 
dustry, has  nothing  except  in  so  far  as  he  succeeds  in 
selling  his  toiP  to  others.  He  sells  it  more  or  less  dear; 
but  this  price,  more  or  less  high  as  it  may  be,  does  not 
depend  upon  himself  alone  :  it  results  from  the  agreement 
which  he  makes  with  him  who  pays  his  labour.  The  latter 
pays  him  as  little  as  he  can;  as  he  has  the  choice  among  a 
great  number  of  Workmen,  he  prefers  the  one  who  works 
cheapest.  The  Workmen  are  therefore  obliged  to  lower 
the  price,  in  competition  with  one  another.^  In  every 
kind  of  work  it  cannot  fail  to  happen,  and  as  a  matter  of 
fact  it  does  happen,  that  the  wages  of  the  workman  are  lim- 
ited to  what  is  necessary  to  procure  him  his  subsistence. 

1  L'Ouvrier.  8  Sa  peine. 

2  Sa  vie.  •*  A  I'envi  les  uns  des  autres. 


AND    THE  DISTRIBUTION  OF  RICHES  9 

I  §.  VII.  ^"^    i-Jl   L-y^^...cs>^-l3A 

The  Husiandmafi  is  the  only  person  whose  labour  produces 
so7nething  over  ajid  above  the  wages  of  the  labour.)  He  is 
therefore  the  sole  somre  of  all  wealth} 

The  position  of  the  Husbandman  is  very  different.  The 
land  pays  him  directly  the  price  of  his  labour,  indepen- 
dently of  any  other  man  or  any  agreement.  Nature  does  not 
bargain  with  him  to  oblige  him  to  content  himself  with 
what  is  absolutely  necessary.  What  she  grants  is  propor- 
tioned neither  to  his  wants,  nor  to  a  contractual  valuation  ' 
of  the  price  of  his  days  of  labour.  It  is  the  physical  result  of 
the  fertility  of  the  soil,  and  of  the  wisdom,  far  more  than 
of  the  laboriousness,  of  the  means  which  he  has  employed 
to  render  it  fertile.  As  soon  as  the  labour  of  the  Hus- 
bandman produces  more  than  his  wants,  he  can,  with  this 
superfluity  that  nature  accords  him  as  a  pure  gift,  over  and 
above  the  wages  of  his  toil,  buy  the  labour  of  the  other 
members  of  the  society.  The  latter,  in  selling  to  him, 
gain  only  their  livelihood;  but  the  Husbandman  gathers, 
beyond  his  subsistence,  a  wealth  which  is  independent 
and  disposable,  which  he  has  not  bought  and  which  he 
sells.  He  is,  therefore,  the  sole  source  of  the  riches, 
which,  by  their  circulation,  animate  all  the  labours  of  the 
society;  because  he  is  the  only  one  whose  labour  produces 
over  and  above  the  wages  of  the  labour. 

1  L'unique  source  de  toute  richesse. 

2  Une  évaluation  conventionnelle. 


10  REFLECTIONS   ON   THE  FORMATION 

§•    VIII. 

First  division  of  the  society  into  two  classes  :  the  one  pro- 
ductive,^ or  that  of  the  Cultivators  ;  the  second  stipen- 
diary,^ or  that  of  the  Artisans. 

Here  then  we  have  the  whole  society  divided,  by  a  ne- 
cessity founded  on  the  nature  of  things,  into  two  classes: 
equally  industrious.^  But  one  of  these  by  its  labour  pro- 
duces, or  rather  draws  from  the  land,  riches  which  are  con- 
tinually springing  up  afresh,  and  which  supply  the  whole 
society  with  its  subsistence  and  with  the  materials  for  all 
its  needs.  The  other,  occupied  in  giving  to  materials  thus 
produced  the  preparations  and  the  forms  which  render 
them  suitable  for  the  use  of  men,  sells  its  labour  to  the 
first  class,  and  receives  in  exchange  its  subsistence.  The 
first  may  be  called  the  j^roduetiv&.^^çXass,  and  the  seconjd 
the  stipendiary  class. 

§.   IX. 

/«  the  first  ages  the  Proprietor  cannot  have  been  distinguished 
frofn  the  Cultivator. 

Up  to  this  point  we  have  not  yet  distinguished  the  Hus- 
bandman from  the  Proprietor*  of  the  lands;  and  in  fact 
they  were  not  originally  distinct.  It  is  by  the  labour  of 
those  who  have  been  the  first  to  till  the  fields,  and  who 
have  enclosed  them,  in  order  to  secure  to  themselves  the 
harvest,  that  all  the  lands  have  ceased  to  be  common  to 

all,    and  that   landed   properties   have   been   established. 
/ 

1  Productrice.  3  Toutes  deux  laborieuses. 

2  Stipendiée.  ^  Propriétaire. 


AND    THE   DISTRIBUTION  OF  RICHES  11 

Until  the  societies  have  been  consolidated,  and  the  public 
force,  or  law,  now  become  superior  to  individual  force, 
has  been  able  to  guarantee  to  each  man  the  tranquil  pos- 
session of  his  property  against  all  invasion  from  without, 
a  man  could  retain  the  ownership  of  a  field  only  in  the 
way  he  had  acquired  it  and  by  continuing  to  cultivate  it. 
It  would  not  have  been  safe  to  get  his  field  cultivated  by 
somebody  else,  who,  having  taken  all  the  trouble,  would 
have  had  difficulty  in  understanding  that  the  whole  harvest 
did  not  belong  to  him.  Moreover,  in  this  early  time,  as 
every  industrious  man  would  find  as  much  land  as  he 
wished,  he  could  not  be  tempted  to  till  the  soil  for  others. 
It  was  necessary  that  every  proprietor  should  cultivate  his 
field  himself,  or  give  it  up  altogether. 

§.  X. 

Progress  of  the  society  ;  all  the  lands  have  a  master. 

But  the  land  filled  up,  and  was  more  and  more  cleared. 
The  best  lands  at  length  came  to  be  all  occupied.  There 
remained  for  the  last  comers  only  the  sterile  soils  rejected 
by  the  first.  But  in  the  end  all  land  found  its  master,  and 
those  who  could  not  have  properties  ^  had  at  first  no  other 
resource  than  that  of  exchanging  the  labour  of  their  arms, 
in  the  employments  of  the  stipendiary  class,  for  the  super- 
fluous portion  of  the  crops  of  the  cultivating  Proprietor. 

1  Propriétés. 


12  REFLECTIONS  ON  THE  FORMATION 

§.   XI. 

The  Proprietors  begin  to  be  able  to  throw  the  labour  of  culti- 
vation upon  hi)'ed  Cultivators. 

But  since  the  land  returned,  to  the  master  who  cultivated 
it,  not  only  his  subsistence,  not  only  that  wherewith  to  pro- 
cure for  himself  by  way  of  exchange  the  other  things  he 
needed,  but  also  a  considerable  superfluity,  he  could,  with 
this  superfluity,  pay  men  to  cultivate  his  land  ;  and  for 
men  who  live  on  wages,  it  was  as  good  to  earn  them  in  this 
business  as  in  any  other.  Thus  ownership  could  be  separ 
rated  from  the  labour  of  cultivation  ;  and  soon  it  was. 

§.  XII. 

Inequality  in  the  division  of  properties  :  causes  which  render 
that  inevitable. 

The  original  Proprietors  at  first  occupied,  as  has  been 
already  said,  as  much  of  the  ground  as  their  forces  per- 
mitted them  to  cultivate  with  their  family.  A  man  of 
greater  strength,  more  industrious,  more  anxious  about  the 
future,  took  more  of  it  than  a  man  of  a  contrary  character. 
He  whose  family  was  more  numerous,  as  he  had  more  needs 
and  more  hands  at  his  disposal,  extended  his  possessions 
further  :  here  was  already  a  first  inequality.  All  pieces  of 
ground  are  not  equally  fertile  :  two  men,  with  the  same 
extent  of  ground  and  the  same  labour,  could  obtain  a  very 
different  produce  from  it:  second  source  of  inequality. 
Properties,  in  passing  from  fathers  to  children,  are  divided 
into  portions  more  or  less  small,  according  as  the  families 


AND    THE  DISTRIBUTION  OF  RICHES  13 

are  more  or  less  numerous;  as  generations  succeed  one 
another,  sometimes  the  inheritances  are  still  further  sub- 
divided, sometimes  they  are  reunited  again  by  the  extinc- 
tion of  some  of  the  branches  :  third  source  of  inequality. 
The  contrast  between  the  intelligence,  the  activity,  and, 
above  all,  the  economy  of  some  and  the  indolence,  inac- 
tion and  dissipation  of  others,  was  a  fourth  principle  of 
inequality  and  the  most  powerful  of  all.  The  negligent 
and  improvident  Proprietor,  who  cultivates  badly,  who,  in 
abundant  years,  consumes  the  whole  of  his  superfluity  in 
frivolities,  finds  himself  reduced,  on  the  least  accident,  to 
request  assistance  from  his  neighbour  who  has  been  more 
prudent,  and  to  live  by  borrowing.  If,  by  new  accidents, 
or  through  a  continuance  of  his  neglect,  he  finds  himself 
not  in  a  condition  to  repay,  if  he  is  obliged  to  have  re- 
course to  new  loans,  he  will  at  last  have  no  other  resource 
than  to  abandon  a  part  or  even  the  whole  of  his  estate  ^  to 
his  creditor,  who  will  take  it  as  an  equivalent;  or  to  assign 
it  to  another,  in  exchange  for  other  values  wherewith  he 
will  discharge  his  obligation  to  his  creditor. 

§.  XIII. 

Consequence  of  this  inequality  :  the  Cultivator  distinguished 
fro7?i  the  Proprietor. 

Here,  then,  we  have  landed  properties  as  objects  of 
commerce,  and  bought  and  sold.  The  portion  of  the 
extravagant  or  unfortunate  Proprietor  serves  for  the  in- 
crease of  that  of  the  Proprietor  who  has  been  more  fortunate 

i  Son  fonds. 


14  REFLECTIONS    ON   THE   FORMATION 

or  more  prudent;  and,  in  this  infinitely  varied  inequality 
of  possessions,  it  is  impossible  but  that  many  Proprietors 
should  have  more  than  they  can  cultivate.  Besides,  it  is 
natural  enough  that  a  rich  man  should  wish  to  enjoy  his 
wealth  in  tranquillity,  and  that  instead  of  employing  his 
whole  time  in  toilsome  labours,  he  should  prefer  to  give  a 
part  of  his  superfluity  to  people  who  will  work  for  him. 

§.  XIV. 

Division  of  the  produce  between  the  Cultivator  <S^'  the  Pro- 
prietor.    Net  produce^  or  revenue. 

By  this  new  arrangement  the  produce  of  the  land  is 
divided  into  two  parts.  The  one  includes  the  subsistence 
and  the  profits  of  the  Husbandman,  which  are  the  reward 
of  his  labour  and  the  condition  upon  which  he  undertakes 
to  cultivate  the  field  of  the  Proprietor.  What  remains  is 
that  independent  and  disposable  part  which  the  land  gives 
as  a  pure  gift  to  him  who  cultivates  it,  over  and  above  his 
advances''^  and  the  wages  of  his  trouble;  and  this  is  the 
portion  of  the  Proprietor,  or  the  revenue^  with  which  the 
latter  can  live  without  labour  and  which  he  carries  where 
he  v/ill. 

§.  XV. 
\ 
\    New  division  of  the  Society  into  three  classes,  of  Cultivators, 

I        of  Artisans  ér»  of  Proprietors  ;  or  the  productive  class,  the 

stipendiary  class  and  the  disposable  class.^ 

1  Produit  net.  3  Revenu. 

2  Avances.  *  Classe  disponible. 


AND    THE   DISTRIBUTION   OF  RICHES  15 

Here  then  we  have  the  Society  divided  into  three 
classes;  the  class  of  Husbandmen,  for  which  we  may  keep 
the  name  of  productive  class  ;  the  class  of  Artisans  and 
others  who  receive  stipends  from  the  produce  of  the  land; 
and  the  class  of  Proprietors,  the  only  one  which,  not  being 
bound  by  the  need  of  subsistence  to  a  particular  labour, 
can  be  employed  for  the  general  needs  of  the  Society,  such 
as  war  and  the  administration  of  justice,  either  by  a  per- 
sonal service,  or  by  the  payment  of  a  part  of  their  revenue 
with  which  the  State  or  the  Society  may  engage  men  to 
discharge  these  functions.  The  name  which,  for  this  rea- 
son, suits  it  the  best  is  that  of  disposable  class. 

§.  XVI. 
Resemblance    between    the   two  working^  or  non-disposable 
classes. 

The  two  classes  of  the  Cultivators  and  the  Artisans  re- 
semble each  other  in  many  respects,  and  above  all  in  this, 
that  those  who  compose  them  possess  no  revenue  and  live 
equally  on  wages,  which  are  paid  them  out  of  the  produce 
of  the  land.  Both  have  also  this  in  common,  that  they 
get  nothing  but  the  price  of  their  labour  and  of  their  ad- 
vances, and  this  price  is  nearly  the  same  in  the  two  classes; 
the  Proprietor  bargaining  with  those  who  cultivate  the  land 
to  yield  to  them  as  small  a  part  of  the  produce  as  possible, 
in  the  same  way  as  he  chaffers  with  his  Shoemaker  to  buy 
his  shoes  as  cheaply  as  possible.  In  a  word,  the  Cultiva- 
tor and  the  Artisan  receive,  neither  of  them,  more  than 
the  recompense  ^  of  their  labour. 

1  Laborieuses.  2  La  rétribution. 


16  REFLECTIONS   ON  THE  FORMATION 

§.  XVII. 

Essential  difference  between  the  two  working  classes. 

But  there  is  this  difference  between  the  two  kinds  of 
labours,  that  the  labour  of  the  Cultivator  produces  his  own 
wages,  and,  in  addition,  the  revenue  which  serves  to  pay  ^ 

,  the  whole  class  of  Artisans  and  other  stipendiaries;  while 
the  Artisans  receive  simply  their  wages;  that  is  to  say  their 

')  part  of  the  produce  of  the  land  in  exchange  for  their 
labour,  and  do  not  produce  any  revenue.  The  Proprietor 
has  nothing  except  through  the  labour  of  the  Cultivator; 
he  receives  from  him  his  subsistence,  and  that  wherewith 
he  pays  the  labours  of  the  other  stipendiaries.  He  has 
need  of  the  Cultivator  through  the  necessity  of  the  physical 
order,  in  virtue  of  which  the  land  produces  nothing  without 
labour;  but  the  Cultivator  has  need  of  the  Proprietor  only 
by  virtue  of  the  human  conventions  and  the  civil  laws 
which  have  been  obliged  to  guarantee  to  the  first  Cultiva- 
tors and  to  their  heirs  the  ownership  of  the  grounds  which 
they  have  occupied  even  after  they  ceased  to  cultivate  them. 
But  these  laws  could  guarantee  to  the  man  who  took  no 
part  in  the  work  himself  only  that  portion  of  the  produce 
which  the  land  gives  over  and  above  the  recompense  -  due 
to  the  Cultivators.  The  Proprietor  is  obliged  to  give  up 
this  latter,  on  pain  of  losing  the  whole.  The  Cultivator, 
confined  though  he  is  to  the  recompense  of  his  labour,  thus 
preserves  that  natural  and  physical  primacy  which  renders 
him  the  first  mover  of  the  whole  machine  of  the  Society 
and  which  causes  his  own  subsistence  as  well  as  the  wealth 
1  Salarier.  2  La  rétribution. 


AND    THE  DISTRIBUTION  OF  RICHES  17 

of  the  Proprietor  and  the  wages  of  all  the  other  labours  to 
depend  upon  his  labour  alone.  The  Artisan,  on  the  con- 
trary, receives  his  wages,  ^  whether  it  be  from  the  Proprietor 
or  from  the  Cultivator,  and  gives  them,  in  exchange  for  his 
labour,  only  the  equivalent  of  these  wages  and  nothing 
more. 

Thus,  although  neither  the  Cultivator  nor  the  Artisan 
gains  more  than  the  recompense  of  his  labour,  the  Culti- 
vator causes,  over  and  above  that  recompense,  the  revenue 
of  the  Proprietor  to  come  into  existence;  and  the  Artisan 
causes  no  revenue  to  come  into  existence  either  for  himself 
or  for  others. 

§.  XVIII. 

This  difference  Justifies  their  being  distinguished  as  produc- 
tive &  barren  class  respectively. 

We  can  then  distinguish  the  two  non-disposable  classes 
as  the  productive  class,  which  is  that  of  the  Cultivators,  and 
the  barren  ^  class,  which  includes  all  the  other  stipendiary 
members  of  the  Society. 

§.   XIX. 

How  the  Proprietors  ai-e  able  to  draw  the  revenue  from 
their  lands. 

The  Proprietors  who  do  not  themselves  till  their  lands 
can  adopt  various  methods  to  get  them  cultivated,  or 
make  different  arrangements  with  those  who  cultivate  them. 

1  Son  salaire,  2  Stérile. 

C 


18  REFLECTIONS   ON   THE  FORMATION 

§.   XX. 
First  method  :  cultivation  by  7nen  who  are  paid  wages} 

They  can,  in  the  first  place,  pay  men  by  the  day  or  the 
year  to  till  their  field,  and  reserve  for  themselves  the  whole 
of  the  produce;  a  method  which  presupposes  that  the  Pro- 
prietor makes  the  advance  both  for  seed  and  for  the  wages 
of  the  workmen  until  after  the  harvest.  But  this  first 
method  has  the  drawback  of  requiring  much  labour  and 
assiduity  on  the  part  of  the  Proprietor,  who  alone  can  direct 
the  workmen  in  their  labours,  watch  over  the  employment 
of  their  time,  and  over  their  fidelity  in  not  diverting  from 
him  any  of  the  produce.  It  is  true  that  he  can  also  hire  a 
man  of  more  intelligence,  with  whose  fidelity  he  is  ac- 
quainted, who  shall  direct  the  workmen  and  keep  an 
account  of  the  produce,  as  overseer  or  manager;  but  he 
will  always  run  the  risk  of  being  deceived.  Besides,  this 
method  is  extremely  expensive,  unless  a  large  population 
and  a  scarcity  of  employment  in  the  other  kinds  of  work 
force  the  workmen  to  be  content  with  very  low  wages. 

§.  XXI. 

Second  method  :  cultivation  by  slaves. 

In  the  times  bordering  on  the  beginning  of  the  societies 
it  was  almost  impossible  to  find  men  who  were  ready  to 
cultivate  the  soil  which  belonged  to  others;  since,  as  all 
the  grounds  were  not  yet  occupied,  those  who  wished  to 
labour  preferred  to  clear  new  lands  and  cultivate  them  on 

1  Salariés. 


AND    THE  DISTRIBUTION  OF  RICHES  19 

their  own  account.  This  is  pretty  much  the  position  in 
which  people  find  themselves  in  all  the  new  colonies. 

Violent  men  have  therefore  conceived  the  idea  of  oblig- 
ing other  men  by  force  to  labour  for  them;  and  they  have 
had  slaves.  These  latter  had  no  justice  to  look  for  from 
fellows  who  could  not  have  reduced  them  to  slavery  without 
violating  all  the  rights  of  humanity.  Yet  the  physical  law 
of  nature  still  assures  them  their  part  in  the  products  which 
they  cause  the  earth  to  bring  forth;  for  the  master  must 
needs  feed  them  in  order  to  profit  by  their  labour.  But 
wages  of  this  kind  are  limited  to  the  barest  necessaries  and 
to  their  subsistence. 

This  abominable  custom  of  slavery  has  once  been  uni- 
versal, and  is  still  spread  over  the  greater  part  of  the  earth. 
The  principal  object  of  the  wars  which  the  peoples  of  an- 
tiquity waged  with  one  another  was  to  carry  off  slaves 
whom  the  conquerors  made  to  labour  for  their  benefit  or 
sold  to  others.  This  brigandage  and  this  trade  still  prevail 
in  all  their  horror  on  the  coasts  of  Guinea,  where  they  are 
fomented  by  the  Europeans  who  go  thither  to  purchase 
negroes  for  the  cultivation  of  the  American  colonies. 

The  excessive  labours  to  which  avaricious  masters  drive 
their  slaves  cause  many  of  them  to  perish;  and  it  is  neces- 
sary, in  order  always  to  keep  up  the  number  requisite  for 
cultivation,  that  trade  should  annually  supply  a  very  great 
number  of  them.  And  as  it  is  always  war  which  supplies 
the  chief  source  of  this  traffic  it  is  evident  that  it  can  exist 
only  as  long  as  men  are  divided  into  very  small  Nations, 
which  tear  one  another  without  ceasing,  and  as  long  as  each 
village   makes   war   upon   its   neighbour.      Let   England, 


20  REFLECTIONS   ON   THE  FORMATION 

France  and  Spain  wage  on  one  another  the  most  furious 
warfare,  it  would  be  the  frontiers  only  of  each  State  that 
would  be  touched,  and  that  only  at  a  small  number  of 
points.  All  the  rest  of  the  country  would  be  quiet,  and 
the  small  number  of  prisoners  they  could  make  on  either 
side  would  be  a  very  inadequate  resource  for  the  agri- 
culture of  any  one  of  the  three  Nations. 

§.  XXII. 

Cultivation  by  slaves  cannot  continue  in  the  great  Societies, 

Thus,  when  men  gather  themselves  together  in  great 
Societies,  the  slave-recruits  cease  to  be  sufficiently  numerous 
to  take  the  place  of  those  used  up  by  agriculture.  And 
although  the  work  of  men  is  supplemented  by  that  of  beasts, 
there  comes  a  time  when  the  lands  can  no  longer  be  worked 
by  slaves.  The  employment  of  them  is  then  retained  only 
for  domestic  service;  and  at  length  it  dies  out  entirely, 
because,  in  proportion  as  Nations  become  civilized,  they 
enter  into  agreements  for  the  exchange  of  prisoners  of  war. 
These  conventions  are  arrived  at  the  more  easily,  because 
each  individual  is  greatly  interested  in  removing  from  him- 
self the  danger  of  falling  into  slavery. 

§.  XXIII. 

Bondage  to  the  soil  ^  follows  slavery  properly  so-called. 

The  descendants  of  the  first  slaves,  originally  attached 
to  the  cultivation  of  the  lands,  themselves  change  their 
condition.    As  internal  peace  within  the  several  Nations  no 

1  L'esclavage  de  la  glebe. 


AND    THE  DISTRIBUTION  OF  RICHES  21 

longer  leaves  commerce  the  wherewithal  to  satisfy  an  exces- 
sive consumption  of  slaves,  the  masters  are  obliged  to  show 
them  more  consideration.  Those  who  are  born  in  the 
house,  as  they  are  accustomed  from  infancy  to  their  con- 
dition, are  less  irritated  by  it,  and  the  masters  have  less 
need  to  employ  severity  in  order  to  control  them.  Little 
by  little  the  soil  they  cultivate  becomes  their  fatherland. 
They  have  no  other  language  than  that  of  their  masters; 
they  become  part  of  the  same  Nation;  they  get  to  be  per- 
sonally acquainted  with  one  another,  and,  as  a  result,  the 
masters  begin  to  act  with  confidence  and  humanity  towards 
them. 

§.  XXIV. 

Vassalage  succeeds  bondage  to  the  soil,  &>  the  slave  becomes 
proprietor.  Third  method:  alienation  of  the  estate^  in 
return  for  a  fixed  paytnent? 

The  administration  of  an  estate  ^  cultivated  by  slaves 
requires  an  onerous  care  and  an  irksome  residence.  The 
master  secures  for  himself  a  freer,  easier,  and  safer  enjoy- 
ment of  his  property  by  interesting  his  slaves  in  the  cultiva- 
tion of  it,  and  giving  up  to  each  of  them  a  certain  extent  of 
ground  on  condition  of  their  paying  him  a  portion  of  the 
fruits.  Some  have  made  this  bargain  for  a  time,  and  have 
left  to  their  serfs  only  a  precarious  and  revocable  possession. 
Others  have  abandoned  the  estate  in  perpetuity,  reserving 
an  annual  rent  from  it,  payable  in  kind  or  in  money,  and 
exacting  from  the  possessors  the  performance  of  certain 
duties.     Those  who  receive    these   lands   under  the  pre- 

1  Le  fonds.  2  Une  redevance.  3  Un  bien. 


22  REFLECTIONS   ON   THE   FORMATION 

scribed  condition  became  proprietors  and  free,  under  the 
name  of  tenants  or  vassals;  and  the  former  proprietors, 
under  the  name  of  seigneurs,  kept  only  the  right  of  exact- 
ing the  payment  of  the  rent  and  the  other  stipulated  dues. 
Thus  have  things  gone  in  the  greater  part  of  Europe. 

§.   XXV. 

Fourth  method  :  the  metayer  system} 

These  estates,  which  have  become  free  on  condition  of 
the  payment  of  rent,  may  yet  change  their  Proprietors,  be 
divided  and  re-united  in  consequence  of  successions  and 
sales;  and  such  and  such  a  Faji-a/may  in  his  turn  come  to 
have  more  land  than  he  can  cultivate  himself.  As  a  rule  the 
rent  to  which  the  estates  are  subject  is  not  so  large  but  that 
by  cultivating  them  well  there  can  still  be  procured,  over 
and  above  the  advances,  the  expenses  and  the  subsis- 
tence of  the  Cultivator,  an  excess  of  produce  which  forms 
a  revenue  :  henceforth  the  Vassal  proprietor,  also,  is  likely 
to  desire  to  enjoy  this  revenue  without  labour  and  to  have 
his  estate  cultivated  by  others.  Moreover,  most  of  the 
Seigneurs  alienate  only  those  parts  of  their  possessions 
which  are  the  least  within  their  reach,  and  retain  those 
which  they  can  get  cultivated  with  less  expense.  Culti- 
vation by  slaves  being  no  longer  practicable,  the  first 
means  which  offered  itself,  and  the  most  simple,  to  in- 
duce free  men  to  cultivate  estates  which  do  not  belong  to 
them,  was  to  give  up  to  them  a  portion  of  the  fruits;  a  plan 
which  would  induce  them  to  cultivate  the  land  better  than 

1  Colonage  partiaire. 


AND    THE  DISTRIBUTION  OF  RICHES  23 

workmen  at  fixed  wages  would  be  likely  to  do.  The  most 
common  division  has  been  that  into  two  equal  parts, 
whereof  one  belonged  to  the  Peasant  ^  and  the  other  to  the 
Proprietor.  It  is  this  that  has  given  rise  to  the  name  of 
Metayer  {inedietarius)  or  Peasant  with  equal  share.  In  the 
arrangements  of  this  kind  which  are  to  be  found  in  the 
greater  part  of  France,  the  Proprietor  makes  all  the  ad- 
vances of  the  cultivation;  that  is  to  say,  he  furnishes  at 
his  own  expense  the  labouring  cattle,  the  ploughs  and 
other  instruments  of  husbandry,  the  seed  and  the  mainte- 
nance of  the  Peasant  and  his  family  from  the  moment 
when  the  latter  enters  on  the  métairie  until  the  first  harvest. 

§.  XXVI. 

Fifth  method  :  farming"^  or  the  letting-out  of  land. 

Intelligent  and  rich  Cultivators,  who  suspected  to  what 
a  point  an  active  and  well-directed  cultivation,  in  which 
neither  labour  nor  expense  should  be  spared,  would  carry 
the  fruitfulness  of  the  land,  judged  with  reason  that  they 
would  gain  more  if  the  Proprietor  consented  to  give  up  to 
them,  for  a  certain  number  of  years,  the  whole  of  every/ 
harvest,  on  condition  of  their  paying  him  annually  a  fixed 
revenue  and  making  all  the  advances  of  the  cultivation. 
Hereby  they  would  make  sure  that  the  increase  of  produc- 
tion obtained  by  their  outlay  and  labour  would  belong  en- 
tirely to  themselves.  The  Proprietor,  on  his  side,  gained 
thereby  a  more  tranquil  enjoyment  of  his  revenue,  since  he 
was  relieved  of  the  care  of  making  the  advances  and  of 

1  Le  Colon.  2  Fermage. 


24  REFLECTIONS   ON   THE  FORMATION 

keeping  an  account  of  the  produce;  a  more  equable  enjoy- 
ment, since  he  received  every  year  the  same  price  of  his 
farm;  and  a  more  certain  enjoyment,  because  he  never  ran 
the  risk  of  losing  his  advances,  and  the  cattle  and  other 
effects  with  which  the  Farmers  had  stocked  his  farm  became 
a  pledge  which  assured  him  of  payment.  Besides,  the 
lease  ^  being  only  for  a  few  years,  if  his  Farmer  had  given 
too  low  a  price  for  his  land  he  could  augment  it  at  the  end 
of  the  lease. 

§.  XXVII. 

This  last  method  is  the  most  advantageous  of  all,  but  it  pre- 
supposes a  country  already  rich. 

This  method  of  putting  out  lands  to  farm  is  the  most 
advantageous  of  all  both  to  the  Proprietors  and  to  the  Cul- 
tivators; it  establishes  itself  everywhere  where  there  are 
rich  Cultivators,  in  a  position  to  make  the  advances  of  the 
cultivation;  and  as  rich  Cultivators  can  provide  the  land 
with  much  more  labour  and  manure,  there  results  from  it  a 
prodigious  increase  in  the  produce  and  revenue  of  estates.'' 

In  Picardy,  Normandy,  the  neighbourhood  of  Paris,  and 
in  most  of  the  Provinces  of  the  North  of  France,  the  lands 
are  cultivated  by  Farmers.^  In  the  Provinces  of  the  South 
they  are  cultivated  by  Métayers;  the  Provinces  of  the  North 
of  France  are  likewise  incomparably  richer  and  better  cul- 
tivated than  those  of  the  South. 

1  Le  bail.  2  Biens  fonds.  ^  Fermiers. 


AND    THE  DISTRIBUTION  OF  RICHES  25 

§.   XXVIII. 

Recapitulation  of  the  different  methods  of  making  lands  pro- 
ductive} 

I  have  just  enumerated  five  different  methods  whereby 
the  Proprietors  have  been  able  to  ease  themselves  of  the 
labour  of  cultivation  and  make  their  estates  productive  by 
the  hands  of  others. 

The  first,  by  workmen  paid  fixed  wages. 

The  second,  by  slaves. 

The  third,  by  giving  up  the  estate  on  condition  of  the 
payment  of  a  rent. 

The  fourth,  by  giving  up  to  the  Cultivator  a  fixed  portion 
of  the  produce,  usually  a  half,  the  Proprietor  undertaking 
to  make  the  advances  of  cultivation. 

The  fifth,  by  letting  the  land  to  Farmers,  who  undertake 
to  make  all  the  advances  of  the  cultivation,  and  who 
promise  to  give  the  Proprietor,  during  the  number  of  years 
agreed  upon,  an  unvarying  revenue. 

Of  these  five  methods  the  first  being  too  expensive  is 
very  rarely  employed;  the  second  can  find  a  place  only  in 
countries  still  ignorant  and  barbarous;  the  third  is  less  a 
way  of  getting  what  one  can  out  of  a  property  than  a  sur- 
render of  the  property  in  consideration  of  a  lien  upon  the 
estate,*^  so  that  the  former  Proprietor  is  no  longer  anything, 
to  speak  properly,  but  a  creditor  of  the  new  proprietor. 

The  two  last  methods  of  cultivation  are  those  most  gener- 
ally used,  to  wit  :  cultivation  by  Métayers  in  poor  countries, 
and  cultivation  by  Farmers  in  the  richer  countries. 

1  De  faire  valoir  les  terres.  *  Une  créance  sur  le  fonds. 


26  REFLECTIONS   ON   THE  FORMATION 

This  systematic  Treatise  ^  is  extensive  enough  to  have  com- 
pletely filled  this  Volume,  if  we  had  inserted  the  whole  of  it. 
We  have  found  a  natural  break  at  this  point;  &"  it  is  this 
that  has  decided  us  to  postpone  the  conclusion  to  the  next 

Volume. 

1  Ce  Mémoire  méthodique. 


AND    THE  DISTRIBUTION  OF  RICHES  11 

CONTINUATION  of  the  Reflections  upon  the 
Formation  and  the  Distribution  of  Riches^ 
by  Mr.  X. 

§.  XXIX. 

Of  capitals  in  general,  and  of  the  revenue  of  money. 

There  is  another  way  of  being  rich,  without  labouring 
and  without  possessing  lands,  of  which  I  have  not  yet 
spoken.  It  is  necessary  to  explain  its  origin  and  its  con- 
nection with  the  rest  of  the  system  of  the  distribution  of 
riches  in  the  society,  of  which  I  have  just  drawn  the  out- 
line. This  way  consists  in  living  upon  what  is  called 
the  revenue  of  one's  money,  or  upon  the  interest  one 
draws  from  money  placed  on  loan. 

§.   XXX. 

Of  the  use  of  gold  a?id  silver  in  comffierce. 

Silver  and  gold  are  two  articles  of  commerce^  like 
others,  and  less  precious  than  many  others,  because  they 
are  of  no  use  for  the  real  needs  of  life.  To  explain  how 
these  two  metals  have  become  the  representative  pledge  ^ 
of  every  kind  of  riches,  what  influence  they  exercise  in  the 
movement  of  Commerce,  and  how  they  enter  into  the  com- 
position of  fortunes,  it  is  necessary  to  go  back  a  little  and 
retrace  our  steps. 

1  Marchandises.  2  Le  gage  représentatif. 


28  REFLECTIONS    ON   THE  FORMATION 

§.   XXXI. 

Birth  of  Commerce.     Principle  of  the  valuation^  of  commer- 
cial things. 

Reciprocal  want  has  led  to  the  exchange  of  what  people 
have  for  what  they  have  not.  People  exchange  one  kind 
of  produce  ^  for  another,  or  produce  for  labour.  In  these 
exchanges  it  is  necessary  that  the  two  parties  should  agree 
both  as  to  the  quality  and  the  quantity  of  each  of  the  things 
exchanged.  In  this  agreement  it  is  natural  that  each  should 
wish  to  receive  as  much  and  give  as  little  as  he  can;  and 
both  being  equally  masters  of  what  they  have  to  give  in  the 
exchange,  each  has  to  balance  the  attachment  he  has  for 
the  commodity  he  gives  against  the  desire  he  has  for  the 
commodity  he  wishes  to  receive,  and  to  fix  in  accordance 
therewith  the  quantity  of  each  of  the  things  exchanged. 
If  the  parties  are  not  in  accord,  it  will  be  necessary  that 
they  should  approach  one  another  by  yielding  a  little  on 
one  side  and  a  little  on  the  other,  offering  more  and  con- 
tenting themselves  with  less.  I  will  suppose  that  one  has 
need  of  corn,  and  the  other  of  wine,  and  that  they  agree  to 
exchange  one  bushel  of  corn  for  six  pints  of  wine.  It  is 
evident  that  by  each  of  them  one  bushel  of  corn  and  six  pints 
of  wine  are  looked  upon  as  exactly  equivalent,  and  that  in 
this  particular  exchange  the  price  of  a  bushel  of  corn  is  six 
pints  of  wine,  and  the  price  of  six  pints  of  wine  is  a  bushel 
of  corn.  But  in  another  exchange  between  other  men  this 
price  will  be  different,  according  as  one  of  them  happens 
to  have  a  more  or  less  pressing  need  of  the  commodity 

1  L'évaluation.  *  Une  denrée. 


AND    THE  DISTRIBUTION  OF  RICHES  29 

belonging  to  the  other;  and  a  bushel  of  corn  may  possibly 
be  exchanged  for  eight  pints  of  wine,  while  another  bushel 
will  be  exchanged  for  only  four  pints.  Now  it  is  evident 
that  no  one  of  these  three  prices  can  be  regarded  as  the 
true  price  ^  of  a  bushel  of  corn  rather  than  the  others;  for 
with  each  of  the  contracting  parties  the  wine  he  has 
received  was  the  equivalent  of  the  corn  he  has  given  :  in 
a  word,  so  long  as  we  consider  each  exchange  as  isolated 
and  standing  by  itself,  the  value  of  each  of  the  things 
exchanged  has  no  other  measure  than  the  need  or  the 
desire  and  the  means  of  the  contracting  parties,  balanced 
one  against  the  other,  and  it  is  fixed  by  nothing  but  the 
agreement  of  their  will. 

§.  XXXII. 

How  the  current  value  ^  establishes  itself  in  the  exchange  of 
commodities. 

However,  it  happens  sometimes  that  several  Individuals 
have  wine  to  offer  to  the  man  who  has  corn:  if  one  is 
not  willing  to  give  more  \ha.n  four  pints  for  a  bushel,  the 
Proprietor  of  the  corn  will  not  give  him  his  corn,  when 
he  comes  to  learn  that  someone  else  will  give  him  six  or 
eight  pints  for  the  same  bushel.  If  the  former  wishes  to 
have  corn,  he  will  be  obliged  to  raise  the  price  to  the  level 
of  him  who  offers  more.  The  Sellers  of  wine  profit  on 
their  side  by  the  competition  among  the  Sellers  of  corn  : 
no  one  makes  up  his  mind  to  part  with  his  commodity 
until  he  has  compared  the  different  offers  that  are  made  to 

1  Le  prix  véritable,  2  La  valeur  courante. 


30  REFLECTIONS   ON   THE  FORMATION 

him  of  the  commodity  he  is  in  need  of,  and  he  gives  the 

preference  to  the  highest  offer.     The  value  of  corn  and  of 

wine  is  no  longer  debated  between  two  isolated  Individuals 

in  relation  to  their  relative  wants  and  abilities;  it  is  fixed 

by  the  balance  of  the  wants  and  abilities  ^  of  the  whole 

body  ^  of  the  Sellers  of  corn  with  those  of  the  whole  body 

of  the  Sellers  of  wine.     For  he  who  would  willingly  give 

eight  pints  of  wine  for  a  bushel  of  corn  will  only  give  four 

when  he  learns  that  a  Proprietor  of  corn  consents  to  give 

two  bushels  oi  corn  for  eight  pints.     The  price  mid-way^ 

between  the  different  offers  and  the  different  demands  will 

,    become  the  current  price,  whereto  all  the  Buyers  and  Sellers 

j    will  conform  in  their  exchanges;  and  it  will  be  true  to  say 

;    that  six  pints  of  wine  are  the  equivalent  of  a  bushel  of 

corn  for  everyone  if  that  is  the  mean  price,  until  a  diminu- 

I   tion  of  the  offer  on  the  one  side  or  of  the  demand  on  the 

I  other  causes  this  valuation  to  change. 

§.  XXXIII. 

f  Commerce  gives  to  each  article  of  commerce  a  current  value, 
with  respect  to  every  other  ai'ticle  ;  whence  it  follows  that 
every  article  of  commerce  is  the  equivalent  of  a  certain 
quantity  of  every  other  article^  à^  can  be  regarded  as  a 
pledge  which  represents  it. 

Corn  is  exchanged  not  only  for  wine,  but  for  all  other 
articles  which  the  proprietors  of  corn  may  need;  for  wood, 
leather,  wool,  cotton,  etc.  :  it  is  the  same  with  wine  and 
with  every  other  kind  of  produce.^     If  one  bushel  of  corn 

1  Les  facultés.  8  Le  prix  mitoyen. 

2  La  totalité.  4  Denrée. 


AND    THE  DISTRIBUTION  OF  RICHES  31 

is  the  equivalent  of  six  piiits  of  wine,  and  one  sheep  is  the 
equivalent  of  three  bushels  of  corn,  this  same  sheep  will  be 
the  equivalent  of  eighteen  pints  of  wine.  He  who  having 
corn  needs  wine  can,  without  inconvenience,  exchange  his 
corn  for  a  sheep,  in  order  afterward  to  exchange  this  sheep 
for  the  wine  he  stands  in  need  of. 

§.   XXXIV. 

Each  article  of  commerce  can  serve  as  the  scale  or  common 
measure  wherewith  to  compare  the  value  of  all  others. 

It  follows  from  this  that  in  a  country  where  Commerce 
is  very  brisk,  where  there  is  much  production  and  much 
consumption,  where  there  are  many  offers  and  demands  for 
all  kinds  of  commodities,  each  kind  will  have  a  current 
price  relatively  to  each  other  kind;  that  is  to  say,  a  cer- 
tain quantity  of  one  will  be  equivalent  to  a  certain  quan- 
tity of  each  of  the  others.  Thus  the  same  quantity  of 
corn  that  will  be  worth  eighteen  pints  of  wine  will  be 
worth  also  one  sheep,  one  piece  of  dressed  leather,  a  cer- 
tain quantity  of  iron:  and  all  those  things  will  have  in 
commerce  an  equal  value.  To  express  and  make  known 
the  value  of  any  particular  thing,  it  is  evident  that  it  is 
sufficient  to  declare  the  quantity  of  any  other  known  com- 
modity which  may  be  regarded  as  its  equivalent.  Thus, 
in  order  to  make  known  the  value  of  a  piece  of  leather  of 
a  certain  size,  we  may  say  indifferently  that  it  is  worth 
three  bushels  of  corn  or  eighteen  pints  of  wifie.  We  may  in 
the  same  way  express  the  value  of  a  certain  quantity  of 
wine  by  the  number  of  sheep  or  bushels  of  corn  that  it  is 
worth  in  Commerce. 


32  REFLECTIONS   ON   THE  FORMATION 

We  see  by  this  that  all  the  kinds  of  commodities  that 
can  be  the  object  of  Commerce  measure  one  another,  so 
to  speak;  that  each  may  serve  as  a  common  measure  or  a 
scale  of  comparison  to  which  to  refer  the  values  of  all  the 
others;  and  in  like  manner  each  commodity  becomes  in 
the  hands  of  its  possessor  a  means  to  procure  all  the  others: 
a  sort  of  universal  pledge. 

§.   XXXV. 

Every  commodity^  does  not  present  an  equally  com'etiient 
I  scale  of  values.  The  preference,  therefore,  has  necessarily 
\  been  given  in  practice  to  those  which,  not  being  susceptible 
\    of  '^  great  difference  in  quality,  have  a  value  principally 

i    relative  to  the  number  or  the  quantity. 

But  although  all  commodities  have  essentially  this  prop- 
erty of  representing  all  others,  of  being  able  to  serve  as  a 
common  measure  to  express  their  value,  and  as  a  universal 
pledge  to  procure  all  of  them  by  the  means  of  exchange, 
all  cannot  be  employed  with  the  same  facility  for  these 
two  purposes.  The  more  a  commodity  is  susceptible  to 
change  of  value  in  proportion^  to  its  quality,  the  more 
difficult  it  is  to  make  it  serve  as  a  scale  to  which  to  refer 
the  value  of  other  commodities.  For  example,  if  eighteen 
pints  of  the  wine  of  Anjou  are  the  equivalent  of  otie  sheep, 
eighteen  pints  oi  the  wine  of  the  Capew'xW  be  the  equivalent 
of  eighteen  sheep.  So  that  he  who  in  order  to  express  the 
value  of  a  sheep,  should  say  that  it  was  worth  eighteen 
pints  of  wine  would  employ  language  that  was  equivocal, 

1  Marchandise,  2  À.  raison  de. 


AND    THE  DISTRIBUTION  OF  RICHES  II 

and  that  would  convey  no  precise  idea,  at  least  until  he 
added  a  good  many  explanations,  which  would  be  very 
inconvenient.  Men  have,  therefore,  been  obliged  to 
choose  by  preference,  for  their  scale  of  comparison,  com- 
modities^ which,  being  more  commonly  in  use  and  hence 
of  a  better  known  value,  were  more  like  one  another,  so 
that  in  consequence  their  value  had  more  relation  to  the 
number  or  the  quantity  than  to  the  quality. 

§.  XXXVI. 

The  want  of  an  exact  correspondence  betiveen  the  value  and 
the  ttumber  or  quantity  has  been  made  up  for  by  a  mean 
valuation^  which  becomes  a  sort  of  ideal  money. 

In  a  country  where  there  is  only  one  race  of  sheep,  the 
value  of  a  fleece  or  of  a  sheep  may  easily  be  taken  for  the 
common  measure  of  values,  and  we  may  say  that  a  barrel 
of  wine  or  a  piece  of  stuff  is  worth  a  certain  number  of 
fleeces  or  of  sheep.  In  reality,  there  is  some  inequality 
among  sheep;  but  when  it  is  a  question  of  actually  selling 
sheep,  care  is  taken  to  make  allowance  for  this  inequality, 
and  to  reckon,  for  example,  two  lambs  as  one  sheep. 
When  it  is  a  question  of  valuing  any  other  commodity, 
people  take  as  their  unit  ^  the  common  value  of  a  sheep  of 
medium  age  and  of  medium  condition.  In  this  way  the 
expression  of  values  in  terms  of  sheep  becomes,  as  it  were, 
a  conventional  language,  and  this  word,  one  sheep,  simply 
signifies  in  the  language  of  commerce  a  certain  value; 
carrying  to  the  mind  of  those  who  hear  it  not  merely  the 

1  Denrées.  2  Une  évaluation  moyenne.  s  Pour  unité. 

D 


34  REFLECTIONS   ON   THE   FORMATION 

idea  of  one  sheep  but  of  a  certain  quantity  of  each  of 
the  more  common  kinds  of  produce/  which  are  regarded  as 
the  equivalent  of  this  value;  and  this  expression  will  end  by 
being  so  entirely  applied  to  a  fictitious  and  abstract  value, 
rather  than  to  a  real  sheep,  that  if  by  chance  a  pestilence 
occurs  among  the  sheep,  and  in  order  to  get  one  it  became 
necessary  to  give  twice  as  much  corn  or  wine  as  were  given 
before,  people  will  say  a  sheep  is  worth  two  sheep,  rather 
than  change  the  expression  to  which  they  have  become 
accustomed  for  all  other  values. 

§.   XXXVII. 

Examples  of  these  mean  valuations  which  become  an  ideal 
expression  of  values. 

We  are  acquainted,  in  the  commerce  of  all  the  Nations, 
with  many  examples  of  these  fictitious  valuations  in  terms 
of  commodities,  which  are,  so  to  speak,  only  a  conventional 
language  in  order  to  express  their  value.  Thus  the  Cooks 
of  Paris  and  the  Fish-mongers  who  provide  great  houses 
generally  sell  by  the  piece.  A  fat  pullet  is  reckoned  as  one 
piece,  a  chicken  as  half  a  piece,  more  or  less  according 
to  the  season,  and  so  on.  In  the  Slave  trade  to  the  Ameri- 
can Colonies  a  cargo  of  negroes  is  sold  at  the  rate  of  so 
much  a  Negro  head,  a  piece  of  India.  The  women  and 
children  are  reckoned  in  such  a  way,  for  example,  that 
three  children  or  even  one  woman  and  one  child  are  reck- 
oned as  one  head  of  Negro.  The  valuation  is  increased  or 
diminished  in  proportion  to  the  strength  and  other  quali- 

1  Des  denrées. 


AND    THE  DISTRIBUTION  OF  RICHES  35 

ties  of  the  slaves;  in  such  a  way  that  a  particular  slave  may 
be  counted  as  two  heads  of  Negro. 

The  Mandingo  Negroes  who  carry  on  the  gold-dust  trade 
with  the  Arabian  Merchants  bring  all  their  commodities  to 
a  fictitious  scale  whereof  the  parts  are  called  maaites,  so 
that  they  tell  the  merchants  that  they  give  them  so  many 
macutes  in  gold.  They  value  likewise  in  macutes  the 
commodities  which  they  receive,  and  their  chaffering  with 
the  Merchants  turns  upon  this  valuation.  Thus  also  in 
Holland  people  reckon  by  Bank  florins,  which  are  nothing 
but  a  fictitious  money,  and  which  in  commerce  have  some- 
times a  higher  and  sometimes  a  lower  value  than  the  money 
called  florins. 

§.   XXXVIII. 

Every  commodity  is  a  pledge  representing  all  the  articles  of\ 
Commerce  ;  but  it  is  more  or  less  convenient  in  practice,^ 
according  as  it  is  more  or  less  easy  to  transport  âr*  to 
keep  without  alteration. 

The  variation  in  the  quality  of  commodities,  and  in  their 
price  in  accordance  with  this  quality,  which  renders  them 
more  or  less  suitable  than  others  to  serve  as  a  common 
measure,  is  also  an  impediment  more  or  less  to  their  being 
a  representative  pledge  of  every  other  commodity  of  a  like 
value.  Nevertheless  there  is,  in  regard  to  this  last  property 
also,  a  very  great  difference  between  the  different  sorts  of 
merchandise.  It  is  evident,  for  example,  that  the  man 
who  possesses  a  piece  of  cloth  is  far  more  sure  of  being 
able  to  procure  for  himself,  whenever  he  may  wish  it,  a 
certain  quantity  of  corn,  than  if  he  had  a  barrel  of  wine 


36  REFLECTIONS   ON   THE  FORMATION 

of  the  same  value;  the  wine  being  subject  to  an  infinity  of 
accidents  which  can  in  an  instant  cause  him  to  lose  its 
entire  price. 

§.  XXXIX. 

Every  commodity  has  the  two  esse?itial  properties  of  money, 
those  of  ?neasuring  and  representing  all  value  ;  &>,  in 
this  sense,  every  commodity  is  money. 

These  two  properties,  of  serving  as  a  common  measure  of 
all  values  and  of  being  a  representative  pledge  of  all  the 
commodities  of  a  like  value,  include  all  that  constitutes 
the  essence  and  utility  of  what  is  called  money;  and  it 
follows  from  the  details  into  which  I  have  just  entered  that 
all  commodities  are,  in  some  respects,  money,  and  share, 
more  or  less  according  to  the  nature  of  each,  in  these  two 
essential  properties.  All  are  more  or  less  suitable  to  serve 
as  a  common  measure  in  proportion  as  they  are  in  general 
use,  of  similar  quality,  and  easy  to  divide  into  parts  of  an 
equal  value.  All  are  more  or  less  fit  to  be  a  universal 
'pledge  of  exchanges,  in  proportion  as  they  are  less  or  more 
susceptible  to  deterioration  and  alteration  in  their  quan- 
tity or  in  their  quality. 

§.  XL. 
Reciprocally,  all  money  is  essentially  merchandise. 

We  can  take  for  a  common  measure  of  values  only  that 
which  has  a  value,  and  which  is  received  in  Commerce  in 
exchange  for  other  values  :  and  there  is  no  pledge  univer- 
sally representative  of  a  value  save  another  equal  value.  A 
purely  conventional  money  is  therefore  an  impossibility. 


AND    THE  DISTRIBUTION  OF  RICHES  37 

§.   XLI. 

Different  articles  have  been  able  to  serve  àf  have  served  as 
ordinary  money. 

Many  Nations  have  adopted  as  a  common  measure  of 
value  in  their  language  and  in  their  Commerce  different 
substances  more  or  less  precious;  there  are  even  to-day 
certain  Barbarous  Peoples  who  employ  a  kind  of  little 
shell  called  Cauriis.  I  remember  to  have  seen  at  College 
apricot  stones  exchanged  and  passed  as  a  kind  of  money 
among  the  Scholars,  who  made  use  of  them  to  play  at  differ- 
ent games.  I  have  already  spoken  of  the  reckoning  by 
head  of  cattle.  One  finds  traces  of  it  in  the  Laws  of  the 
ancient  German  Nations  who  destroyed  the  Roman  Em- 
pire. The  early  Romans,  or  at  least  the  Latins  their 
ancestors,  also  made  use  of  it.  It  is  said  that  the  first 
coin  struck  in  copper  represented  the  value  of  a  sheep, 
and  bore  the  imprint  of  that  animal,  and  that  it  is  from 
this  that  the  word  pecunia  has  come,  from  pecus.  This 
conjecture  has  a  good  deal  of  probability. 

§.  XLII. 

The  Metals,  and  especially  gold  and  silver,  are  more  fit  for 
this  purpose  than  any  other  substance  ;  6^  why. 

We  have  thus  come  to  the  introduction  of  the  precious 
metals  into  Commerce.  All  the  metals,  as  one  after  the 
other  they  have  been  discovered,  have  been  admitted  into 
the  exchanges  in  proportion  to  their  real  utility.  Their 
brilliancy  has  caused  them   to  be  sought  for  to  serve  as 


38  REFLECTIONS    ON   THE  FORMATION 

ornament;  their  ductility  and  solidity  have  rendered  them 
fit  to  make  vessels  more  durable  and  lighter  than  those 
of  clay.  But  these  substances  could  not  be  in  Commerce 
without  becoming  almost  immediately  the  universal  Money  ; 
a  piece  of  any  metal,  whatever  it  may  be,  has  exactly  the 
same  qualities  as  another  piece  of  the  same  metal,  provided 
it  is  equally  pure  :  moreover  the  facility  with  which  a 
metal  can,  by  various  operations  of  Chemistry,  be  sepa- 
rated from  others  with  which  it  may  be  alloyed,  makes 
it  possible  always  to  reduce  them  to  the  degree  of  purity, 
or,  as  they  call  it,  to  the  title,  that  one  desires:  and  then 
the  value  of  the  metal  can  only  vary  according  to  its 
weight.  In  expressing,  then,  the  value  of  each  commodity 
by  the  weight  of  the  metal  one  gives  in  exchange  we  have 
the  clearest,  the  most  convenient,  and  the  most  exact 
expression  of  all  the  values;  and  henceforth  it  is  impos- 
sible that  it  should  not  in  practice  be  preferred  to  every 
other.  Nor  are  the  metals  less  suitable  than  other  com- 
modities to  become  the  universal  pledge  of  all  the  values 
they  can  measure  :  as  they  are  susceptible  of  all  imagin- 
able divisions,  there  is  no  article  of  Commerce  whose 
value,  great  or  small,  cannot  be  exactly  paid  for  by  a 
certain  quantity  of  metal.  To  this  advantage  of  lending 
themselves  to  every  kind  of  division,  they  add  that  of 
being  unalterable  :  and  those  that  are  rare,  like  gold  and 
silver,  have  a  very  great  value  in  a  very  inconsiderable 
weight  and  bulk. 

These  two  metals  are,  then,  of  all  merchandise  the  most 
easy  to  verify  as  to  their  quality,  to  divide  as  to  their 
quantity,  to  keep  forever  without  alteration,  and  to  trans- 


AND    THE  DISTRIBUTION  OF  RICHES  39 

port  to  all  places  at  the  least  expense.  Everyone  who 
has  a  surplus  commodity,  and  has  not  at  the  moment 
any  need  of  another  commodity  for  use,  will  hasten  to 
exchange  it  for  money;  with  which  he  is  more  sure,  than 
with  anything  else,  to  be  able  to  procure  the  commodity 
he  shall  wish  for  at  the  moment  he  is  in  want  of  it. 

§.  XLIII. 

Gold  àf  silver  are  constituted,  by  the  nature  of  things, 
money,  ày  universal  money  ;  independe?itly  of  all  conven- 
tioji  &>  of  all  law. 

Thus,  then,  we  come  to  the  constitution  of  gold  and 
silver  as  money  and  universal  money,  and  that  without 
any  arbitrary  convention  among  men,  without  the  inter-  ^ 
vention  of  any  law,  but  by  the  nature  of  things.  They,; 
are  not,  as  many  people  have  imagined,  signs  of  values^ 
they  have  themselves  a  value.  If  they  are  susceptible  of; 
being  the  measure  and  the  pledge  of  other  values,  they, 
have  this  property  in  common  with  all  the  other  articles 
that  have  a  value  in  Commerce.  They  differ  only  because 
being  at  once  more  divisible,  more  unalterable,  and  more 
easy  to  transport  than  the  other  commodities,  it  is  more 
convenient  to  employ  them  to  measure  and  represent  the 
values. 

§.  XLIV. 

The  employment  of  the  other  metals  for  these  purposes  is  only 
subsidiary. 

All  the  metals  would  be  capable  of  being  employed  as 
money.     But  those  that  are  very  common  have  too  little 


40  REFLECTIONS   ON   THE  FORMATION 

value  in  a  too  large  bulk  to  be  employed  in  the  current 
exchanges  of  Commerce.  Copper,  silver,  and  gold  are 
the  only  ones  which  have  been  brought  into  constant  use. 
And  even  copper,  except  among  certain  Peoples,  who  have 
not  yet  been  able  to  obtain  a  sufficient  quantity  of  gold 
and  silver  from  mines  or  Commerce,  has  only  served  in  the 
exchanges  of  the  smallest  values. 

§.  XLV. 

The   use   of  gold  ér*  silver  as  motiey  has  augmented  their 
value  as  materials} 

It  is  impossible  but  that  the  eagerness  with  which  every- 
one has  sought  to  exchange  his  superfluous  products^  for 
gold  and  silver  rather  than  for  any  other  produce  should 
have  greatly  augmented  the  value  of  these  two  metals  in 
Commerce.  They  have  thereby  become  only  the  more 
suitable  for  their  employment  as  pledge  and  as  common 
measure. 

§.  XLVI. 

!  Variations  in  the  value  of  gold  âr»  of  silver,  compared  with 
,,    the  other  articles  of  Commerce  ô^  with  one  another. 

i 

This  value  is  susceptible  of  change,  and  in  fact  does 
change  continually;  so  that  the  same  quantity  of  metal 
which  corresponded  to  a  certain  quantity  of  such  or  such  a 
commodity  ceases  to  correspond  to  it,  and  more  or  less 
money  is  needed  to  represent  the  same  commodity.  When 
more  is  needed  the  commodity  is  said  to  be  dearer,  and 

1  Comme  matière.  -  Denrées. 


AND    THE  DISTRIBUTION  OF  RICHES  41 

when  less  is  needed  it  is  said  to  be  cheaper;  but  one  might 
just  as  well  say  that  it  is  the  money  that  is  cheaper  in  the 
first  case  and  dearer  in  the  second.  Not  only  do  silver  and 
gold  vary  in  price  as  compared  with  all  other  commodities; 
but  they  vary  in  price  among  themselves  according  as  they 
are  more  or  less  abundant.  It  is  well  known  that  we  now 
give  in  Europe  from  fourteen  to  fifteen  ounces  of  silver  for 
one  ounce  of  gold,  and  that  in  earlier  times  only  from  te?i 
to  eleven  ounces  of  silver  wtrt  given  for  one  ounce  of  gold. 
Even  at  present  in  China  they  give  only  about  twelve 
ounces  of  silver  to  get  one  ounce  of  gold:  so  that  there  is  a 
very  great  advantage  in  taking  silver  to  China  to  exchange 
for  gold  to  bring  back  to  Europe.  It  is  evident  that  in  the| 
long  run  this  Commerce  is  bound  to  make  gold  more  comj  ; 
mon  in  Europe,  and  more  rare  for  China,  and  that  thel  / 
value  of  these  two  metals  is  certain  to  come  at  last  to  thel  ) 
same  proportion  everywhere.  \_i 

A  thousand  different  causes  concur  to  fix  at  each  moment 
the  value  of  commodities  when  compared  either  with  one 
another  or  with  money,  and  to  cause  them  to  change  in- 
cessantly. The  same  causes  determine  the  value  of  money, 
and  cause  it  to  vary  when  compared,  either  with  the  value 
of  each  particular  commodity,  or  with  the  totality  of  the 
other  values  which  are  actually  in  Commerce.  It  would 
not  be  possible  to  disentangle  these  different  causes  and  to 
unfold  their  effects  without  going  into  very  extensive 
and  very  difficult  detail,  and  I  shall  abstain  from  entering 
upon  that  discussion. 


42  REFLECTIONS   ON  THE  FORMATION 

§.   XLVII. 

V    Tlie  custom  of  payments  in  money  has  given  rise  to  the  dis- 
t        tinction  between  the  Buyer  ô^  the  Seller. 

In  proportion  as  men  have  become  accustomed  to  the 
practice  of  valuing  everything  in  money,  of  exchanging  all 
their  superfluity  for  money,  and  of  exchanging  money  only 
for  the  things  which  are  useful  or  agreeable  to  them  at 
the  moment,  they  have  become  accustomed  to  consider  the 
exchanges  of  Commerce  from  a  new  point  of  view.  They 
have  distinguished  two  persons  in  it,  the  Seller  and  the 
Buyer.  The  Seller  was  the  one  who  gave  the  commodity 
for  money,  and  the  Buyer  the  one  who  gave  money  to  get 
the  commodity. 

§.  XLVIII. 

I  The  practice  of  using  money  has  greatly  facilitated  the  sepa- 

1 1      ration  of  different  labours  among  the  different  Members  of 

I  j      Society. 
I 

The  more  money  came  to  stand  for  everything  else,  the 

more  possible  did  it  become  for  each  person,  by  devoting 
himself  entirely  to  the  kind  of  cultivation  or  industry  he 
had  chosen,  to  relieve  himself  of  all  care  for  the  satisfac- 
tion of  his  other  wants,  and  to  think  only  how  he  could 
obtain  as  much  money  as  possible  by  the  sale  of  his  fruits 
or  his  labour,  very  sure  that  by  means  of  this  money  he  can 
/|  get  all  the  rest.  It  is  thus  that  the  employment  of  money 
^  has  prodigiously  hastened  the  progress  of  Society. 


AND    THE  DISTRIBUTION  OF  RICHES  43 

§.   XLIX. 

Concerning  the  resen>e  of  annual  products,  accumulated  to 
form  cjipitals. 

As  soon  as  men  were  found  whose  property  in  land 
assured  them  an  annual  revenue  more  than  sufficient  to 
satisfy  all  their  wants,  there  were  sure  to  be  found  men 
who,  either  because  they  were  anxious  about  the  future, 
or  for  mere  prudence,  put  in  reserve  a  part  of  what  they 
gathered  each  year;  either  to  meet  possible  chances,  or  to 
increase  their  comfort.  When  the  produce  they  gathered 
was  difficult  to  keep,  they  must  have  sought  to  procure  for 
themselves  in  exchange  articles  of  a  more  durable  nature, 
whose  value  would  not  be  destroyed  by  time,  or  which  could 
be  employed  in  such  a  fashion  as  to  obtain  profits  which 
would  repair  the  loss  of  value  with  still  further  gain. 

§.   L. 

Moveable  riches}     Accumulation^  qfjmoney. 

Possessions  of  this  kind,  resulting  from  the  accumulation 
of  annual  produce  not  consumed,  are  known  by  the  name  of 
ifioveable  riches.  Furniture,  houses,  plate,  commodities 
in  warèÏÏôûsêspthe  tools  of  each  trade  and  cattle  belong  to 
this  kind  of  wealth.  It  is  evident  that  men  worked  hard 
to  obtain  as  much  as  possible  of  this  kind  of  wealth  before 
they  became  acquainted  with  money;  but  it  is  no  less  clear 
that,  as  soon  as  it  was  known,  as  soon  as  it  was  proved  to  be 

1  Richesses  mobiliaires. 

2  Amas.  \^Amasser  and  Accumuler  are  used  interchangeably  in  this 
section.] 


44  REFLECTIONS   ON   THE  FORMATION 

the  most  unchangeable  of  all  the  articles  of  Commerce  and 
the  easiest  to  keep  without  trouble,  it  could  not  fail  to  be 
sought  after  before  everything  else  by  anyone  who  wished 
to  accumulate.  It  was  not  only  the  Proprietors  of  lands 
who  thus  accumulated  their  superfluity.  Although  the 
profits  of  industry  are  not,  like  the  revenues  of  the  earth,  a 
gift  of  nature,  and  the  man  engaged  in  industry  gets  from 
his  work  nothing  but  the  price  given  him  for  it  by  the 
person  who  pays  his  wages;  although  this  latter  economises 
as  much  as  possible  in  this  payment  of  wages,  and  compe- 
tition obliges  the  man  engaged  in  industry  to  content  him- 
self with  a  price  less  than  he  would  like,  it  is  nevertheless 
certain  that  this  competition  has  never  been  numerous 
enough  or  keen  enough  in  all  the  different  kinds  of  labours 
to  prevent  at  any  time  a  man  who  was  more  expert,  more 
active,  and,  above  all,  more  economical  than  others  in  his 
personal  consumption,  from  gaining  a  little  more  than  was 
necessary  for  the  subsistence  of  himself  and  his  family  and 
from  saving  this  surplus  to  create  therewith  a  little  store. ^ 

§.  LI. 

'Mtoveabk  riches  are  an  indispensable  prerequisite  for  all 

I'j    lucrative  works. 
M 

It  is  even  necessary  that  in  every  trade  the  Workmen,  or 

the  Undertakers  -  who  set  them  at  work,  should  have  a  cer- 
tain fund  of  moveable  riches  accumulated  beforehand. 
Here  we  are  again  obliged  to  retrace  our  steps  and  recall 
several  matters  which  at  first  were  only  hinted  at  on  the 

1  Un  petit  pécule.  *  Les  Entrepreneurs. 


AND    THE  DISTRIBUTION  OF  RICHES  45 

way,  when  we  spoke  of  the  division  of  the  several  profes- 
sions, and  of  the  different  means  by  which  the  Proprietors 
could  make  their  estates  productive,  because  we  could  not 
have  explained  them  then  without  breaking  the  thread  of 
ideas. 

§.  LII. 

Necessity  of  advances  ^  in  agriculture. 

All  the  various  kinds  of  labours,  whether  in  the  cultiva- 
tion of  the  land,  in  industry,  or  in  Commerce,  require 
advances.  Even  if  one  should  till  the  land  with  one's 
hands,  it  would  be  necessary  to  sow  before  reaping:  it 
would  be  necessary  to  live  until  after  the  harvest.  The 
more  perfect  and  energetic  the  cultivation  of  the  land  be- 
comes, the  more  considerable  are  these  advances.  There 
is  need  of  cattle,  of  implements  of  husbandry,  of  buildings 
to  hold  the  cattle  and  store  the  produce;  it  is  necessary 
to  pay  a  number  of  persons  proportioned  to  the  extent  of 
the  undertaking,  and  to  enable  them  to  subsist  until  the 
harvest.  It  is  only  by  means  of  considerable  advances 
that  we  obtain  a  large  return,  and  that  the  lands  produce 
a  good  deal  of  revenue.  In  every  craft,  whatever  it  may 
be,  it  is  necessary  that  the  Workman  should  have  tools 
in  advance,  that  he  should  have  a  sufficient  quantity  of 
the  materials  upon  which  he  has  to  labour;  it  is  necessary 
that  he  should  subsist  while  waiting  for  the  sale  of  his 
finished  goods. 

1  Avances. 


46  REFLECTIONS   ON   THE  FORMATION 

§.   LIII. 

First  advances  furnished  by  the  land  while  still  uncultivated. 

It  is  the  earth  which  is  ahvays  the  first  and  only  source 
of  all  wealth;  ^  it  is  that  which  as  the  result  of  cultiyatioiL 
produces  all  the  revenue;  it  is  that  also  which  has  pro- 
«  divided  the  first  fund  of  advances^  prior  to  all  cultivation. 
The  first  Cultivator  has  taken  the  seed  he  has  sown  from 
plants  which  the  earth  had  of  itself  produced;  while  wait- 
ing for  the  harvest  he  has  lived  by  hunting  and  fishing, 
and  upon  wild  fruits:  his  tools  have  been  branches  of 
trees,  torn  down  in  the  forests,  shaped  with  stones  sharp- 
ened against  other  stones;  he  has  himself  captured  in  the 
chase  animals  wandering  in  the  woods  or  caught  them  in 
his  traps;  he  has  brought  them  into  subjection  and  trained 
them;  he  has  made  use  of  them  first  for  food  and  afterwards 
to  help  him  in  his  labour.  This  first  fund  has  grown  little 
by  little;  the  cattle,  especially,  were  of  all  moveable  wealth 
that  which  was  most  sought  after  in  those  early  times  and 
that  which  was  most  easy  to  accumulate  :  they  died,  but 
they  reproduced  themselves,  and  the  wealth  which  consists 
in  them  is  in  a  way  imperishable  :  this  fund,  moreover, 
grows  by  the  mere  process  of  generation,  and  gives  an 
annual  produce,  either  in  milk,  or  in  fleeces,  in  hides  and 
other  materials,  which,  with  the  wood  obtained  in  the 
forests,  have  formed  the  first  fund  for  the  works  of  industry. 

1  Toute  richesse.  2  Fond  des  avances. 


AND    THE  DISTRIBUTION  OF  RICHES  47 

§.   LIV. 

Cattle,  moveable  wealth  even  before  the  cultivation  of  the 
landsi 

In  a  time  when  there  was  still  a  large  quantity  of  unculti- 
vated lands  which  belonged  to  no  one,  one  might  possess 
cattle  without  being  a  Proprietor  of  lands.  It  is  even 
probable  that  mankind  has  almost  everywhere  begun  to 
collect  flocks  and  live  on  their  produce  before  it  gave 
itself  up  to  the  more  toilsome  labour  of  agriculture. 
It  would  seem  that  the  Nations  which  cultivated  the  earth 
in  the  most  ancient  times  are  those  which  have  found  in 
their  Country  kinds  of  animals  more  susceptible  of  being 
tamed,  and  that  have  been  led  in  this  way  from  the  wan- 
dering and  restless  life  of  the  Peoples  who  live  by  the  chase 
and  fishing  to  the  more  tranquil  life  of  Pastoral  Peoples. 
Pastoral  life  necessitates  dwelling  for  a  longer  time  in  the 
same  place;  it  affords  more  leisure;  more  opportunities  to 
study  the  difference  of  soils,  to  observe  the  march  of  nature 
in  the  production  of  those  plants  which  serve  for  the  sup- 
port of  cattle.  Perhaps  it  is  for  this  reason  that  the  Asiatic 
Nations  have  been  the  first  to  cultivate  the  earth,  and  that 
the  Peoples  of  America  have  remained  so  long  in  the  state 
of  Savages. 

§.  LV. 

Another ^ind  nf   mmipahlfi   ijipalfh^  cr»  of  advances  of  agri- 
culture :  the  slaves. 

The  slaves  were  another  kind  of  moveable  riches,  pro- 
cured at  first  by  violence  and  afterwards  by  way  of  Com- 


48  REFLECTIONS   ON   THE   FORMATION 

■  merce  and  exchange.  Those  who  had  many  of  them 
employed  them  not  only  for  the  cultivation  of  lands,  but 
also  for  different  works  of  industry.  The  ease  with  which 
these  two  kinds  of  riches  could  be  accumulated  almost 
without  limit,  and  made  use  of,  even  independently  of  the 
lands,  made  it  possible  to  value  the  lands  themselves  and 
compare  their  value  to  that  of  moveable  riches. 

§.  LVI. 

V'  Moveable  riches  have  a  value  exchangeable  against  the  land 
I      itself. 

A  man  who  happened  to  have  a  good  many  pieces  of  land 
but  no  cattle  or  slaves  would  certainly  have  made  an  advan- 
tageous bargain  if  he  surrendered  part  of  his  land  to  à  man 
who  gave  him  in  exchange  cattle  and  slaves  to  cultivate  the 
rest.  It  is  in  this  way  chiefly  that  estates  of  land^  them- 
selves entered  into  Commerce  and  had  a  value  comparable 
with  that  of  all  other  commodities,  lifour  bushels  of  corn, 
the  net  produce  of  an  acre  of  land,  were  worth  six  sheep, 
the  acre  itself  which  produced  them  could  be  transferred 
at  a  certain  value,  larger  of  course  but  always  easily  deter- 
mined in  the  same  manner  as  the  price  of  all  other  com- 
modities ;  that  is  to  say,  first  by  chaffering  ^  between  the 
two  parties  to  the  contract,  and  afterwards  in  accordance 
with  the  current  price  established  by  the  competition  of 
those  who  wished  to  exchange  lands  for  cattle  and  of  those 
who  wished  to  part  with  cattle  in  order  to  get  lands.  It  is 
in  accordance  with  this  current  price  that  lands  are  valued 

i  Les  fonds  de  terre.  2  Par  le  débat. 


AND    THE  DISTRIBUTION  OF  RICHES  49 

when  a  Debtor  is  sued  by  his  Creditor  and  compelled  to 
give  his  estate  up  to  him. 

§.  LVII. 

Valuation  of  lands  in  accordance  with  the  proportion  which 
the  revenue  bears  to  the  amount  of  moveable  wealth,  or 
the  value,  for  which  they  are  exchanged:  this  proportion 
is  what  is  called  the  penny  ^  of  the  price  of  lands. 

It  is  evident  that  if  a  piece  of  land  which  produces  a 
revenue  equal  to  six  sheep  can  be  sold  for  a  certain  value 
which  can  always  be  expressed  by  a  number  of  sheep  equiva- 
lent to  this  value,  this  number  will  have  a  definite  pro- 
portion to  the  number  six,  and  will  contain  it  a  certain 
number  of  times.  The  price  of  an  estate'^  then  will  be 
simply  so  many  times  its  revenue;  twetiiy  times  if  the  price 
is  a  hundred  and  twenty  sheep,  thirty  times  if  it  is  a 
hundred  and  eighty  sheep.  Thus  the  current  price  of  lands 
regulates  itself  in  accordance  with  the  relation  in  which 
the  value  of  the  estate  stands  to  the  value  of  the  revenue, 
and  the  number  of  times  that  the  price  of  the  estate  con- 
tains the  revenue  is  called  the  penny  of  the  price  of  lands. 
Lands  are  sold  for  the  twentieth  pen?iy,  the  thirtieth,  the' 
fortieth,^  etc.,  when  people  pay  twenty,  thirty,  or  forty  times 
their  revenue  in  order  to  get  them.  It  is  also  evident  that 
this  price,  or  this  penny,  must  vary  according  as  there  are 
more  or  fewer  people  who  wish  to  sell  or  buy  lands;  just 

1  Le  denier  du  prix  des  terres.  [The  meaning  of  this  phrase,  equivalent 
to  the  English  "  number  of  years'  purchase,"  is  sufficiently  explained  in  the 
section.] 

2  Un  fonds.  3  Le  denier  vingt,  trente,  quarante. 

E 


so  REFLECTIONS   ON   THE  FORMATION 

as  the  price  of  all  other  articles  of  commerce  varies  in 
accordance  with  the  varying  proportion  between  supply 
and  demand.^ 

§.   LVIII. 

very  capital  in  money,  or  every  sum  of  value  whatever  it 
may  be,  is  the  equivalent  of  a  piece  of  land  producing  a 
revenue  equal  to  a  definite  fraction  of  that  sum.  First 
employment  of  capitals.     Purchase  of  an  estate  of  land. 

Let  us  now  go  back  to  the  time  just  after  the  introduction 
of  money  :  the  ease  with  which  it  can  be  accumulated  has 
soon  made  it  the  most  sought  after  of  moveable  riches, 
and  has  furnished  the  means  to  augment  its  quantity  un- 
ceasingly simply  by  means  of  economy.  LWhoever,  either 
from  the  revenue  of  his  land,  or  from  the  wages  of  his 
labour  or  of  his  industry,  receives  each  year  more  values 
than  he  needs  to  spend,  may  place  this  superfluity  in  reserve 
and  accumulate  it:  these  accumulated  values  are  what  is 
called  a  capital.  J  The  timid  Miser,  who  amasses  money 
only  to  quiet  his  imagination  against  the  apprehension  of 
needing  the  necessaries  of  life  in  an  uncertain  future, 
keeps  his  money  in  a  hoard.  If  the  dangers  he  foresaw 
should  be  realised  and  if  he  should  be  reduced  by  poverty 
to  live  each  year  upon  his  treasure,  or  if  it  should  happen 
that  a  prodigal  Heir  should  spend  it  by  degrees,  this  treas- 
ure would  soon  be  exhausted  and  the  capital  entirely  lost 
to  the  Possessor:  the  latter  can  do  much  better  with  it. 
Since  an  estate  of  land  of  a  certain  revenue  is  but  the 

1  L'offre  et  la  demande. 


AND    THE  DISTRIBUTION  OF  RICHES  51 

equivalent  of  a  sum  of  value  equal  to  this  revenue  multi- 
plied a  certain  number  of  times,  it  follows  that  any  sum 
whatever  of  values  is  the  equivalent  of  an  estate  of  land 
producing  a  revenue  equal  to  a  definite  fraction  of  that 
sum  :  it  is  absolutely  indifferent  whether  this  sum  of  values 
or  this  capital  consists  in  a  mass  of  metal  or  anything  else, 
since  the  money  represents  every  kind  of  value,  just  as 
every  kind  of  value  represents  money.  iXhe, Possessor  of  a 
capital  cd^xi  then,  in  the  first  place,  employ  it  in  the  pur- 


chase  of  lands;  but  he  has  also  other  resources 


§.  LIX. 
Another  employment  of  money,  in  the  advances  of  f^tanu- 


^turing  and  industrial  enterprises} 

.  .^.Ma^—w—M—iwwM^— awful—  wjiiimiuatiMwiyiWWt 

I  have  already  remarked  that  all  labours,  whether  for 
agriculture  or  for  industry,  require  advances.  And  I  have 
shown  how  the  earth,  by  the  fruits  and  herbs  which  it  pro- 
duces of  itself  for  the  nourishment  of  men  and  animals, 
and  by  the  trees  whereof  men  have  formed  their  first  tools, 
had  furnished  the  first  advances  of  cultivation,  and  even  of 
the  first  hand-made  articles-  that  each  man  might  fashion 
for  his  own  use.  For  example,  it  is  the  earth  which  has 
furnished  the  stone,  the  clay,  and  the  wood,  wherewith  the 
first  houses  were  built;  and,  before  the  separation  of  pro- 
fessions, when  the  same  man  that  cultivated  the  earth  pro- 
vided by  his  labour  for  his  other  needs,  he  required  no 
other  advances  :  but  when  a  large  part  of  the  Society  had 

1  En  avances  des  entreprises  de  fabrication  et  d'industrie, 

2  Ouvrages  manuels. 


52  REFLECTIONS   ON   THE  FORMATION 

only  their  arms  to  maintain  them,  it  was  necessary  that  those 
who  thus  lived  on  wages  should  begin  by  having  something 
in  advance,  either  to  procure  the  materials  upon  which  to 
labour,  or  to  maintain  them  while  waiting  for  the  payment 
of  their  wages. 

§.   LX. 

Further  explanations  as  to  the  employment  of  the  advance  of 
capitals  in  enterprises  of  industry,  as  to  their  return^  &^ 
as  to  the  profit  they  ought  to  yield. 

In  the  earliest  times  he  who  set  men  to  work  furnished 
the  materials  himself  and  paid  from  day  to  day  the  wages 
of  the  Workman.  It  was  the  Cultivator  or  the  Proprietor 
himself  that  gave  to  the  Spinner  the  hemp  he  had  gathered, 
and  maintained  her  during  the  time  of  her  working;  then 
he  handed  over  the  yarn  to  a  Weaver,  to  whom  he  gave 
every  day  the  wages  agreed  upon;  but  these  slight  daily 
advances  could  be  sufficient  only  for  works  of  the  simplest 
and  roughest  kind.  A  great  number  of  Crafts,^  and  even 
of  the  Crafts  engaged  in  by  the  poorest  Members  of  the 
Society,  require  that  the  same  material  should  pass  through 
a  crowd  of  different  hands,  and  undergo  for  a  very  long  time 
exceedingly  difficult  and  various  operations.  I  have  already 
mentioned  the  preparation  of  the  leather  whereof  shoes  are 
made  :  whoever  has  seen  the  establishment  of  a  Tanner 
realises  the  absolute  impossibility  of  one  poor  man,  or  even 
of  several  poor  men,  providing  themselves  with  hides,  lime, 
tan,  utensils,  etc.,  getting  the  buildings  erected  which  are 
necessary  for  setting  a  Tan-house  in  operation,  and  living 
1  Rentrée.  2  Arts. 


AND    THE  DISTRIBUTION   OF  RICHES  53 

during  several  months  until  the  leather  is  sold.  In  this 
Craft,  and  in  many  others,  must  not  those  who  work  at  it 
have  learned  the  trade  before  they  venture  to  touch  the 
materials,  which  they  would  spoil  in  their  first  attempts? 
Here,  then,  is  another  advance  indispensable.  Who,  in 
the  next  place,  will  collect  the  materials  for  the  work,  the 
ingredients  and  the  tools  necessary  for  the  process?  Who 
will  get  canals,  market  halls,  all  the  different  kinds  of 
buildings  constructed?  Who  will  enable  that  great  num- 
ber of  Workmen  to  live  until  the  leather  is  sold,  of  whom 
none  could  prepare  a  single  skin  by  himself  ?  considering, 
moreover,  that  the  profit  on  the  sale  of  a  single  tanned  hide 
could  not  furnish  subsistence  for  any  one  of  them.  Who 
will  defray  the  expenses  for  the  instruction  of  Pupils  and 
Apprentices?  Who  will  procure  for  them  the  means  of 
subsistence  until  they  are  taught,  by  enabling  them  to  pass 
step  by  step  from  labour  which  is  easy  and  proportioned  to 
their  age  to  labours  which  demand  the  utmost  vigour  and 
ability?  It  will  be  onejoi„ those  Ppssjssprs  of  ra/zVizAj  or 
of  moveable  accumulated  values,  who  will  employ  them, 
partly  in  advances  for  the  construction  of  the  establishment 
and  for  the  purchases  of  materials,  partly  for  the  daily 
wages  of  the  Workmen  who  labour  in  the  preparation  (of 
the  commodities).  It  is  he  who  will  wait  for  the  sale  of 
the  leather  to  return  to  him  not  only  all  his  advances  but  a 
profit  in  addition,  sufficient  to  make  up  to  him  for  what 
his  money  would  have  been  worth  to  him  if  he  had  em- 
ployed it  in  the  purchase  of  an  estate;  and,  furthermore, 
for  the  wages  due  to  his  labours,  his  cares,  his  risks,  and 
even  his  skill;  for  doubtless,  if  the  profit  were  the  same, 


54  REFLECTIONS   ON   THE  FORMATION 

he  would  have  preferred  to  live  without  any  exertion  on 
the  revenue  of  the  land  he  could  have  acquired  with  the 
same  capital.  As  fast  as  this  capital  comes  back  to  him  by 
'■•-  the  sale  of  the  products,  he  uses  it  for  new  purchases  in 
order  to  supply  and  maintain  his  Manufactory  by  this  con- 
tinual circulation  :  on  his  profits  he  lives,  and  he  places  on 
one  side  what  he  can  spare  to  increase  his  capital  and  put 
into  his  business,  adding  to  the  amount  of  his  advances 
in  order  to  add  still  more  to  his  profits. 

§.  LXL 

Subdivision  of  the  industrial  stipendiary  Class  into  capital- 
ist Undertakers  and  simple  Workmen. 

Thus  the  whole  Class  occupied  in  supplying  the  different 
wants  of  the  Society  with  the  vast  variety  of  industrial  pro- 
ducts finds  itself,  so  to  speak,  subdivided  into  two  orders: 
that  of  the  Undertakers,  Manufacturers,  Employers,^  all 
possessors  of  large  capitals  which  they  make  profit  from"  by 
setting  men  at  work,  by  means  of  their  advances;  and  the 
second  order,  which  is  composed  of  simple  Artisans  who 
have  no  other  property  but  their  arms,  who  advance  only 
their  daily  labour,  and  receive  no  profit  but  their  wages. 

§.   LXII. 

Another  employment  of  capitals,  in  advances  for  the  enter- 
prises of  Agriculture.  Explanations  as  to  the  use,  the 
return,  à^  the  indispensable  profits  of  capitals  in  the  enter- 
prises of  Agriculture. 

1  Maîtres  Fabricans.  2  Qu'ils  font  valoir. 


AND    THE   DISTRIBUTION  OF  RICHES  55 

In  speaking  first  of  the  employment  of  capitals  in  the 
enterprises  of  Manufacture,  I  have  had  as  my  object  to 
present  a  more  striking  example  of  the  necessity  and  effect 
of  large  advances,  and  of  the  course  of  their  circulation: 
but  I  have  a  little  reversed  the  natural  order,  which  would 
have  required  that  I  should  begin  by  speaking  of  the  en- 
terprises of  agriculture,  which  in  like  manner  can  neither 
be  carried  on  nor  extended  nor  made  profitable  save  by 
means  of  great  advances.  It  is  the  Possessors  of  great 
capitals  who,  in  order  to  profit  by  them  in  agricultural 
enterprises,  take  leases  of  lands  ^  paying  the  Proprietors 
large  rents, ^  and  undertaking  to  make  all  the  advances  of 
the  cultivation.  Their  position  is  necessarily  the  same  as 
that  of  the  Undertakers  of  Manufactories  :  like  them  they 
are  obliged  to  make  the  first  advances  of  the  undertaking, 
to  provide  themselves  with  cattle,  with  horses,  with  tools 
of  husbandry,  and  to  purchase  the  first  seed;  like  them 
they  are  obliged  to  maintain  and  feed  the  Carters,  Reapers, 
Threshers,  Servants,  and  Workmen  of  every  kind  who  have 
nothing  but  their  arms,  advance  only  their  labour,  and  get 
only  their  wages;  like  them  they  have  to  obtain  from  the 
harvests,  besides  the  return  of  their  capitals,  that  is  to  say, 
of  all  their  advances  both  original  and  annual,  i.  a  profit 
equal  to  the  revenue  they  could  acquire  with  their  capitals 
without  labour;  2.  the  wages  and  the  price  of  their  labour, 
of  their  risks,  and  of  their  industry;  3.  that  wherewith  to 
replace  annually  the  wear  and  tear  of  the  property  employed 
in  their  undertaking,  the  cattle  that  die,  the  tools  that 
wear  out,  etc.  All  this  must  first  be  deducted  from^  the 
1  Afferment  les  terres.  2  Loyers.  3  Prélevé  sur. 


56  REFLECTIONS    ON   THE   FORMATION 

price  of  the  products  of  the  earth;  the  surplus  serves  the 
Cultivator  for  paying  the  Proprietor  for  the  permission  he 
has  given  him  to  make  use  of  his  iield  for  setting  his  enter- 
prise on  foot.  This  is  the  price  of  the  lease, ^  the  revenue 
of  the  Proprietor,  Ûît'net^roduce ;  for' aTrilîe'TânH'^o- 
duces,  up  to  the  exact  amount  of  the  advances  of  every 
kind  and  of  the  profits  of  every  kind  due  to  him  who  has 
made  the  advances,  cannot  be  regarded  as  a  revetiue,  but 
only  as  the  return  of  the  expenses  of  cultivation  ;  when  one 
considers  that,  if  the  Cultivator  did  not  get  them  back, 
he  would  take  care  not  to  employ  his  riches  and  his  toil  in 
cultivating  the  field  of  another. 

§.    LXIII. 

The  competition  of  Capitalist  Undertakers  in  agriculture^ 
establishes  the  current  price  of  leases^  ô^  farming  on  a 
large  scaled 

The  competition  of  rich  Undertakers  in  agriculture  fixes 
the  current  price  of  leases  in  proportion  to  the  fertility  of 
the  land  and  the  price  at  which  its  products  are  sold,  always 
according  to  the  calculation  the  Farmers  make,  both  of  their 
expenses  and  of  the  profits  they  ought  to  draw  from  their 
advances  :  they  cannot  give  the  Proprietor  more  than  the 
surplus.  But,  when  the  competition  among  them  is  very 
keen,  they  give  him  all  this  surplus,  the  Proprietor  only 
letting  his  land  to  him  who  offers  the  highest  rent. 

1  Le  prix  du  fermage.  3  Fermages. 

2  Capitalistes  Entrepreneurs  de  culture.  *  La  grande  culture. 


AND    THE  DISTRIBUTION  OF  RICHES  57 

§.   LXIV. 

The  lack  of  Capitalist  Undertakers  restricts  agriculture  to 
the  small-farming  method} 

When,  on  the  contrary,  there  are  no  rich  men  who  have 
large  capitals  to  put  into  agricultural  enterprises;  when, 
owing  to  the  low  price  of  the  products  of  the  land  or  for 
any  other  reason,  the  crops  are  not  enough  to  ensure  to  the 
Undertakers,  besides  the  return  of  their  funds, '^  profits  at 
least  equal  to  those  which  they  would  derive  from  their 
money  if  they  employed  it  in  an  entirely  different  way;  then 
Farmers  are  not  to  be  found  who  will  be  willing  to  take  the 
lands  on  lease.  The  Proprietors  are  forced  to  get  them  cul- 
tivated by  "Colons  "  or  Métayers,  who  are  unable  to  make 
any  advances  or  to  carry  on  a  proper  cultivation.  The 
Proprietor  himself  makes  some  scanty  ^  advances  which 
produce  him  a  very  scanty  revenue:  if  the  land  belongs 
to  a  Proprietor  who  is  poor  or  in  debt  or  neglectful,  or  to  a 
Widow,  or  to  a  Minor,  it  stays  out  of  cultivation.  Such  is 
the  true  principle  of  the  difference  I  have  already  noticed 
between  the  Provinces  where  the  land  is  cultivated  by  rich 
Farmers,  as  in  Normandy  and  the  Isle  of  France,  and  those 
where  it  is  cultivated  only  by  poor  Métayers,  like  the 
Limousin,  the  Angoumois,  the  Bourbonnais,  and  several 
others. 

1  La  petite  culture.  2  Fonds.  s  Médiocres. 


58  REFLECTIONS   ON   THE  FORMATION 

§.   LXV. 

Subdivision  of  the  Class  of  Cultivators  into  Undertakers  or 
Farmers  &>  mere  Wage-earners,  whether  Servants  ^  or 
Day-labourers. 

Hence  it  follows  that  the  Class  of  Cultivators  divides 
itself,  like  that  of  the  Manufacturers,  into  two  orders  of 
men,  that  of  the  Undertakers  or  Capitalists  who  make  all 
the  advances,  and  that  of  mere  wage-earning  Workmen, 
It  is  evident,  also,  that  it  is  the  capitals  alone  which  enter 
upon  and  carry  through  the  great  enterprises  of  Agriculture, 
which  give  to  the  lands  an  invariable  rental  value,  if  I  may 
venture  to  use  the  expression,  and  which  assure  the  Pro- 
prietors a  revenue  which  is  always  constant  and  as  large  as 
possible. 

§.   LXVI. 

Fourth  employ?nent  of  capitals,  in  advances  for  undertakings 
in  Commerce.  Necessity  of  the  interposition  of  Merchants, 
properly  so-called,  between  the  Producers  of  the  commodity 
&*  the  Consumers. 

The  Undertakers,  either  in  the  cultivation  of  the  land  or 
in  Manufactures,  get  back  their  advances  and  their  profits 
only  from  the  sale  of  the  fruits  of  the  earth  or  of  the  manu- 
factured commodities.  It  is  always  the  wants  and  the 
means  of  the  Consumer  that  set  the  price  at  the  sale;  but 
the  Consumer  does  not  always  need  the  goods  or  produce 
at  the  moment  of  harvest  or  of  the  finishing  of  the  manu- 
facture; yet  the  undertakers  find  it  necessary  that   their 

1  Valets  (i.e.  persons  permanently  employed). 


AND    THE  DISTRIBUTION  OF  RICHES  59 

funds  should  return  to  them  immediately  and  regularly,  in 
order  that  they  may  put  them  back  into  their  businesses. 
The  harvest  must  be  followed  without  break  by  plowings 
and  the  sowing  of  the  seed;  the  Workmen  of  a  Manufac- 
ture must  be  kept  in  continuous  employment;  a  fresh  set 
of  articles  must  be  begun  as  soon  as  the  first  set  is  finished; 
materials  must  be  replaced  as  they  are  being  consumed. 
It  would  not  be  safe  to  interrupt  the  labours  of  an  enterprise 
once  set  on  foot,  and  they  could  not  be  taken  up  again  just 
when  one  wished.  The  Undertaker  has  thus  the  greatest 
possible  interest  in  getting  his  funds  returned  to  him  with 
the  utmost  promptitude  by  the  sale  of  his  crops  or  of  his 
goods:  on  the  other  hand,  it  is  the  Consumer's  interest  to 
find  the  things  he  stands  in  need  of  when  he  wants  them 
and  where  he  wants  them;  it  would  be  extremely  incon- 
venient for  him  to  be  obliged  to  purchase  his  provision  for 
a  whole  year  at  the  moment  of  harvest.  Among  the  articles 
that  are  commonly  consumed  there  are  many  that  require 
long  and  expensive  labours,  labours  that  can  only  be  under- 
taken with  profit  upon  a  very  large  quantity  of  material,  — 
so  large  that  the  consumption  of  a  small  number  of  men  or  of 
a  limited  district  could  not  be  enough  to  carry  off  the  work 
of  a  single  Manufactory.  The  undertakings  which  have  to 
do  with  work  of  this  kind  must,  then,  necessarily  be  few  in 
number,  at  a  considerable  distance  from  each  other,  and 
consequently  very  far  from  the  homes  of  a  great  majority 
of  the  Consumers  :  there  is  no  man  above  extreme  poverty 
who  is  not  in  a  position  to  consume  several  things  which 
are  neither  gathered  nor  manufactured  except  in  places  far 
removed  from  his  home  and  equally  far  removed  from  each 


60  REFLECTIONS   ON  THE  FORMATION 

Other.  A  man  who  could  only  procure  the  articles  of  his 
consumption  by  buying  them  directly  from  the  hand  of 
him  who  had  gathered  or  manufactured  them,  would  go 
without  a  good  many  things  or  spend  his  life  in  travel. 

This  double  interest  on  the  part  both  of  the  Producer 
and  of  the  Consumer,  of  the  first  to  find  an  opportunity  to 
sell,  of  the  other  to  find  an  opportunity  to  buy,  and  yet  not 
to  lose  precious  time  in  waiting  for  the  Purchaser  or  seek- 
ing the  Seller,  must  have  suggested  to  third  parties  to  act 
as  intermediaries  between  the  two.  This  is  the  purpose 
of  the  profession  of  Merchants  who  purchase  the  com- 
modity from  the  hand  of  the  Producer,  in  order  to  make  a 
store  of  it  or  to  furnish  a  warehouse  whither  the  Consumer 
comes  to  get  what  he  needs.  In  this  way  the  Undertaker, 
assured  of  the  sale  and  of  the  return  of  his  funds,  devotes 
himself  undisturbedly  and  continuously  to  further  produc- 
tion, and  the  Consumer  finds  within  his  reach  and  at  any 
moment  the  things  of  which  he  is  in  want. 

§.  LXVII. 

Different  orders  of  Merchants.  All  have  this  in  common, 
that  they  purchase  to  sell  again,  and  that  their  business 
depends  upon  advances  which  need  to  return  with  profit^ 
in  order  to  be  once  fnore  put  into  the  undertaking. 

From  the  Huckster  who  displays  her  pot-herbs  on  the 
market-place  up  to  the  Ship-owner  of  Nantes  or  of  Cadiz 
who  carries  on  his  sales  and  purchases  as  far  as  India  or 
America,    the    profession    of  a    merchant,    or    commerce 

1  Leur  trafic  roule  sur  des  avances  qui  doivent  rentrer  avec  profit. 


AND    THE  DISTRIBUTION  OF  RICHES  61 

properly  so  called,  is  divided  into  an  infinity  of  branches 
and,  so  to  speak,  of  steps.  This  merchant  confines 
himself  to  getting  in  a  supply  of  one  or  of  several  sorts 
of  commodities  which  he  sells  in  his  shop  to  all  who 
present  themselves.  That  other  goes  to  sell  certain  com- 
modities in  the  place  where  they  are  wanted,  in  order  to 
bring  from  thence  in  exchange  such  things  as  are  produced 
there,  and  are  wanting  in  the  place  from  which  he  set  out. 
One  makes  his  exchanges  in  his  own  neighbourhood  and 
by  himself,  another  by  means  of  Correspondents  and  by  the 
help  of  Carriers  whom  he  pays,  and  whom  he  sends  and 
brings  from  one  Province  to  another,  from  one  Kingdom 
to  another  Kingdom,  from  Europe  to  Asia  and  from  Asia 
to  Europe.  One  sells  his  merchandise  in  small  pieces  to 
the  several  individuals  who  consume  them,  the  other  sells 
only  in  large  quantities  at  the  time  to  other  Merchants  who 
sell  them  over  again  at  retail  to  the  Consumers.  But  all  have 
this  in  common  that  they  buy  to  sell  again,  and  that  their 
first  purchases  are  an  advance  which  returns  to  them  only 
in  course  of  time  :  it  is  bound  to  return  to  them,  like  the 
advances  of  Undertakers  in  Agriculture  and  Manufacture, 
not  only  undiminished  within  a  certain  period,  to  be  em- 
ployed for  new  purchases,  but  also  i.  with  a  profit  equal 
to  the  revenue  which  they  could  acquire  with  their  capital 
without  any  labour;  2.  with  the  wages  and  the  price  of  their 
labour,  of  their  risks,  and  of  their  industry.  Without  the 
assurance  of  this  return  and  of  these  indispensable  profits, 
no  Merchant  would  undertake  Commerce,  and  no  one  could 
possibly  go  on  with  it:  it  is  from  this  point  of  view  that  he 
guides  himself  in  his  purchases,  when  he  calculates  the 


62  REFLECTIONS   ON    THE  FORMATION 

quantity  and  the  price  of  ttie  things  which  he  can  hope  to 
sell  in  a  certain  time.  The  Retailer  learns  by  experience, 
by  the  success  of  limited  attempts  made  with  care,  what, 
more  or  less,  is  the  quantity  of  the  wants  of  the  Consumers 
he  is  in  a  position  to  supply.  The  Trader  learns  by  his  Cor- 
respondents ^  as  to  the  abundance  or  scarcity  and  as  to  the 
price  of  merchandise  in  the  different  countries  to  which 
he  extends  his  Commerce;  he  directs  his  speculations 
accordingly;  he  sends  the  commodities  from  the  place 
where  they  bear  a  low  price  to  those  where  they  are  sold 
for  a  higher;  it  being  understood,  of  course,  that  the  ex- 
pense of  Carriage  enters  into  the  calculation  of  the  ad- 
vances which  have  to  return  to  him. 

Since  Commerce  is  necessary,  and  it  is  impossible  to 
undertake  any  commerce  without  advances  proportionate 
to  its  extent,  we  see  another  employment  of  moveable 
wealth,  a  new  use  that  the  possessor  of  a  mass  of  values 
saved  ^  and  accumulated,  of  a  sum  of  money,  of  a  capital  in 
one  word,  can  make  of  it  in  order  to  benefit  by  it,  in  order 
to  obtain  his  subsistence,  and  to  increase,  if  he  can,  his 
riches. 

§.  LXVIII. 

True  idea  of  the  circulation  of  money. 

We  see,  by  what  has  just  been  said,  how  that  the  cultiva- 
tion of  land,  manufactures  of  all  kinds,  and  all  branches  of 
commerce  depend  upon  ^  a  mass  of  capitals,  or  of  move- 
able accumulated  riches,  which  having  been  at  first  advanced 

1  Correspondances.  8  Roulent  sur. 

*  Une  masse  de  valeurs  mise  en  réserve. 


AND    THE  DISTRIBUTION  OF  RICHES  63 

by  the  Undertakers  in  each  of  these  different  classes  of 
labours,  must  return  to  them  every  year  with  a  steady 
profit;  that  is,  the  capital  to  be  again  invested  and  advanced 
anew  in  the  continuation  of  the  same  enterprises,  and  the 
profit  to  provide  for  the  more  or  less  comfortable  subsist- 
ence of  the  Undertakers.  It  is  this  advance  and  this  con- 
tinual return  of  capitals  which  constitute  what  one  must 
call  the  circulation  of  money  ;  that  useful  and  fruitful  circu- 
lation which  gives  life  to  all  the  labours  of  the  society, 
which  maintains  movement  and  life  in  the  body  politic, 
and  which  is  with  great  reason  compared  to  the  circulation 
of  blood  in  the  animal  body.  For  if,  by  any  disorder,  be 
it  what  it  may,  in  the  sequence  of  expenditures  ^  on  the 
part  of  the  different  classes  of  society,  the  Undertakers 
cease  to  get  back  their  advances  with  the  profit  they  have 
a  right  to  expect  from  them,  it  is  evident  that  they  will  be 
obliged  to  reduce  their  undertakings;  that  the  amount  of 
labour,  the  amount  of  consumption  of  the  fruits  of  the  earth, 
the  amount  of  production  and  the  amount  of  revenue  will 
be  reduced  in  like  measure;  that  poverty  will  take  the  place 
of  wealth,  and  that  the  common  Workmen,  ceasing  to  find 
employment,  will  fall  into  the  extremest  destitution. 

§.  LXIX. 

All  economic  undertakings ,^  particularly  those  of  manufacture 
and  cofnmerce,  could  not  fail  to  be  extremely  limited  before 
the  introductioti  of  gold  &=  silver  in  commerce. 

1  L'ordre  des  dépenses. 

2  Toutes  les  entreprises  de  travaux. 


64  REFLECTIONS   ON   THE  FORMATION 

It  is  hardly  necessary  to  remark  that  undertakings  of  all 
kinds,  but  especially  those  of  manufacture  and  still  more 
those  of  commerce,  must  needs  have  been  greatly  limited 
before  the  introduction  of  gold  and  silver  in  commerce; 
since  it  was  almost  impossible  to  accumulate  considerable 
capitals,  and  still  more  difficult  to  multiply  and  divide 
■  payments,  as  much  as  is  necessary  to  facilitate  and  multiply 
exchanges  to  the  extent  which  is  demanded  by  a  thriving 
commerce  and  circulation.  Agriculture  alone  could  main- 
tain itself  a  little,  because  cattle  are  the  principal  object 
of  the  advances  it  requires;  moreover,  it  is  probable  that 
there  was  then  no  other  agricultural  undertaker  but  the 
proprietor.  As  to  crafts  of  all  kinds,  they  must  have  lan- 
guished greatly  before  the  introduction  of  money.  They 
were  limited  to  the  roughest  kinds  of  occupations,  for 
which  the  Proprietors  furnished  the  advances  by  feeding 
the  Workmen  and  by  providing  them  with  materials,  or 
which  they  caused  to  be  carried  on  at  home  by  their 
Domestics. 

§.  LXX. 

f  I  Capitals  being  as  necessary  to  all  undertakings  as  labour 

W  and  industry,  the  industrious  maji  is  ready  to  share  the 

j  j  profits  of  his   undertaking  with  the  Capitalist  who  fur- 

\  I  nishes  him  with  the  funds  of  which  he  has  fieed. 


ill 


Since  capitals  are  the  indispensable  foundation  of  every 

/j     undertaking,  since  also  money  is  a   principal  means  for 

'  I     economising  from  small  gains,  amassing  profits,  and  grow- 

/     ing  rich,  those  who,  though  they  have   industry  and  the 

y      love  of   labour,  have  no  capitals  or  not  enough   for  the 


AND    THE  DISTRTBUTIO.V   OF  RICHES  65 

undertakings  they  wish  to  embark  in,  have  no  difficulty 
in  making  up  their  minds  to  give  up  to  the  Possessors 
of  capitals  or  money,  who  are  willing  to  trust  them  with 
it,  a  portion  of  the  profits  they  expect  to  gain  over  and 
above  the  return  of  their  advances. 

§.  LXXI. 

Fifih  employment  of  capitals  :  the  loan  upon  interest.    Nature 
of  the  loan. 

The  Possessors  of  money  balance  the  risk  their  capital 
may  run  if  the  enterprise  does  not  succeed,  with  the  advan- 
tage of  enjoying  a  definite  profit  without  labour;  and  they 
are  influenced  thereby  to  demand  more  or  less  profit  or 
interest  for  their  money,  or  to  consent  to  lend  it  in  return 
for  the  interest  the  Borrower  offers  them.  Here,  then,  is 
another  outlet  open  to  the  Possessor  of  money,  —  lend- 
ing on  interest,  or  the  trade  in  money.  For  one  must 
not  make  a  mistake;  lending  on  interest  is  nothing  in  the 
world  but  a  commercial  transaction  in  which  the  Lender 
is  a  man  who  sells  the  use  of  his  money  and  the  Borrower 
a  man  who  buys  it;  precisely  as  the  Proprietor  of  an  estate 
and  his  Farmer  sell  and  buy  respectively  the  use  of  a 
piece  of  land  which  is  let  out.  This  is  what  is  perfectly 
expressed  by  the  name  the  Latins  gave  to  the  interest  of 
money  placed  on  loan,  —  usura  pecimiœ,  a  word  the  French 
Rendering  of  which  has  become  hateful  in  consequence  of 
the  false  ideas  which  have  been  formed  as  to  the  interest 
of  money. 


66  REFLECTIONS    ON   THE  FORMATION 

The  author  here  adds  some  very  wise  reflections  upon 
the  loan  at  interest,  and  continues  the  explanation  of  his 
doctrine  as  to  the  forjnation  cr'  employment  of  Capitals.  It 
is  with  much  regret  that  we  find  ourselves  obliged,  by  the 
abundance  of  our  matter,  to  postpone  this  continuation  of 
his  Work  to  our  next  Volutne,  in  which  we  shall  give  the 
conclusion  of  it. 


AND    THE  DISTRIBUTION  OF  RICHES  67 


Continuation  &  conclusion  of  the  Refiec- 

tions  upon  the  Formation  &  the  Distribu- 
tion of  Riches,  the  commencement  of  which 
is  to  be  found  in  the  preceding  Volumes. 

§.   LXXII. 

False  ideas  as  to  lending  upon  interest} 

The  price  of  the  loan  is  by  no  means  founded,  as  might 
be  imagined,  on  the  profit  the  borrower  hopes  to  make  with 
the  capital  of  which  he  purchases  the  use.  This  price  is 
determined,  like  the  price  of  all  merchandise,  by  the  chaf- 
fering of  seller  and  buyer,  by  the  balance  of  the  offer  with 
the  demand.  People  borrow  with  every  kind  of  purpose 
and  with  every  sort  of  motive.  This  one  borrows  to  under- 
take an  enterprise  which  will  make  his  fortune,  this  other 
to  purchase  an  estate:  another  to  pay  a  gaming  debt; 
another  to  make  up  for  the  loss  of  his  revenue  of  which 
some  accident  has  deprived  him;  and  another  to  keep  him- 
self alive  until  he  can  get  something  by  his  labour;  but 
all  these  motives  which  influence  the  borrower  are  quite 
indifferent  to  the  lender.  He  cares  about  two  things  only, 
the  interest  he  is  to  receive,  and  the  safety  of  his  capital. 
He  does  not  trouble  himself  about  the  use  the  borrower 
will  make  of  it,  any  more  than  a  Merchant  concerns  him- 
self with  the  use  a  purchaser  will  make  of  the  commodi- 
ties he  sells  him. 

1  Le  prêt  à  intérêt. 


68  REFLECTIONS   ON   THE  FORMATION 

§.    LXXIII. 
Errors  of  the  Schoolmen  refuted. 

It  is  for  want  of  having  looked  at  lending  on  interest  in 
its  true  light  that  certain  moralists,  more  rigid  than  en- 
lightened, have  endeavoured  to  make  us  regard  it  as  a 
crime.  The  Scholastic  theologians  have  concluded  from 
the  fact  that  money  produces  nothing  by  itself  that  it  was 
unjust  to  demand  interest  for  money  placed  on  loan.  Full 
of  their  prejudices,  they  have  believed  their  doctrine  was 
sanctioned  by  this  passage  of  the  Gospel  :  Mutuum  date, 
nihil  inde  sperantes.  Those  theologians  who  have  adopted 
more  reasonable  principles  on  the  subject  of  interest  have 
had  to  endure  the  harshest  reproaches  from  writers  of  the 
opposite  party. 

Nevertheless  it  needs  but  little  reflection  to  realise  the 
frivolity  of  the  pretexts  which  have  been  made  use  of  to 
condemn  the  taking  of  interest  A  loan  is  a  reciprocal 
contract,  free  between  the  two  parties,  which  they  make 
only  because  it  is  advantageous  to  them.  It  is  evident 
that,  if  the  Lender  finds  it  to  his  advantage  to  receive 
something  as  the  hire  of  his  money,  the  Borrower  is  equally 
interested  in  finding  the  money  of  which  he  stands  in  need; 
as  is  shown  by  his  making  up  his  mind  to  borrow  and  to 
pay  the  hire^  of  the  money:  but  on  what  principle  can  one 
imagine  a  crime  in  a  contract  which  is  advantageous  to 
the  two  parties,  with  which  both  are  content  and  which 
certainly  does  not  injure  anyone  else.  To  say  that  the 
Lender  takes  advantage  of  the  Borrower's  need  of  money 

1  Le  loyer. 


AND    THE  DISTRIBUTION  OF  RICHES  69 

to  demand  interest  for  it  is  to  talk  as  absurdly  as  if  one  ") 
should  say  that  a  Baker  who  demands  money  for  the  bread  ^ 
he  sells  takes  advantage  of  the  Purchaser's  need  of  bread. 
If,  in  the  latter  case,  the  money  is  the  equivalent  of  the 
bread  the  Purchaser  receives,  the  money  which  the  Borrower 
receives  to-day  is  equally  the  equivalent  of  the  capital  and 
of  the  interest  which  he  promises  to  return  at  the  expiration 
of  a  certain  time;  for,  in  short,  it  is  an  advantage  for  the  / 
Borrower  to  have  during  this  interval  the  money  he  stands  i^^ 
in  neej^f,  and  it  is  a  disadvantage  to  the  Lender  to  be 
deprived  of  it.  _  This  disadvantage  is  capable  of  being 
estimated,^  and  it  is  estimated;  the  interest  is  the  price  of 
it.  This  price  ought  to  be  higher  if  the  Lender  runs  a  risk 
of  losing  his  capital  by  the  insolvency  of  the  Borrower. 
The  bargain,  therefore,  is  perfectly  equal  on  both  sides, 
and  consequently  fair.  Money  considered  as  a  physical 
substance,  as  a  mass  of  metal,  does  not  produce  anything; 
but  money  employed  in  advances  for  enterprises  in  Agri- 
culture, Manufacture,  and  Commerce  procures  a  definite 
profit.  With  money  one  can  purchase  an  estate,  and 
thereby  procure  a  revenue.  The  person,  therefore,  who 
lends  his  money  does  not  merely  give  up  the  barren  pos- 
session of  that  money;  he  deprives  himself  of  the  profit  or 
of  the  revenue  which  he  would  have  been  able  to  procure 
by  it;  and  the  interest  which  indemnifies  him  for  this  pri- 
vation cannot  be  regarded  as  unjust.  The  Schoolmen,  com- 
pelled to  acknowledge  the  justice  of  these  considerations, 
have  allowed  that  interest  for  money  may  be  taken  provided 
that  the  capital  is  alienated,  that  is  to  say,  provided  that  the 

1  Appréciable. 


70  REFLECTIONS   ON   THE   FORMATION 

Lender  renounces  his  right  to  demand  the  repayment  of  his 
money  in  a  certain  time,  and  leaves  the  Borrower  free  to 
keep  it  as  long  as  he  wishes  on  condition  only  that  he  pays 
the  interest.  The  reason  of  this  toleration  was,  that  then 
it  is  no  longer  a  loan  for  which  interest  was  taken,  it  is  a 
rent  purchased  with  a  sum  of  money,  as  one  purchases  an 
estate  of  land.  This  was  a  petty  subtlety  to  which  they 
had  recourse,  in  order  to  yield  to  the  absolute  necessity 
there  is  of  borrowing  money  in  the  course  of  the  transac- 
tions of  society,  without  distinctly  recognising  the  falsity 
of  the  principles  in  accordance  with  which  they  had  con- 
demned it;  but  this  condition  of  the  alienation  of  the 
capital  is  not  an  advaîvEâgFTo  tTïé  Borrower,  inasmuch  as 
Kë" remains  just  as  much  charged  with  thS  debt  until  he 
shall  have  repaid  this  capital,  and  his  property  continues 
throughout  to  be  burdened  by  the  lien  involved  in  its  posi- 
tion as  security  for  the  capital.^  It  is  even  a  disadvantage, 
in  that  he  finds  money  to  borrow,  when  he  has  need  of  it, 
with  more  difficulty  :'  for  a  man  who  would  readily  agree  to 
lend  for  a  year  or  two  a  sum  of  money  he  intends  to  buy  an 
estate  with,  would  not  be  ready  to  lend  it  for  an  indefinite 
time.  Moreover,  if  it  is  permitted  to  sell  one's  money  for 
perpetual  rent,  why  cannot  one  let  ^  it  for  a  certain  number 
of  years,  in  return  for  a  rent  to  continue  only  for  that  num- 
ber of  years?  If  a  rent  of  a  thousand  francs  a  year  is  the 
equivalent  for  a  sum  of  twenty  thousand  francs  in  the  case 
of  a  man  who  keeps  that  sum  in  perpetuity,  a  thousand 
francs  will  be  the  equivalent  each  year  of  the  possession 
of  that  sum  during  a  year. 

1  Les  biens  sont  toujours  affectés  à  la  sûreté  de  ce  capital.         2  Louer. 


AND    THE  DISTRIBUTION  OF  RICHES  71 

§.   LXXIV. 

True  foundation  of  the  interest  of  money. 

A  man,  then,  may  let  his  money  as  properly  as  he  may 
sell  it;  and  the  possessor  of  money  may  do  either  one  or 
the  other,  not  only  because  the  money  is  the  equivalent  of 
a  revenue  and  a  means  to  procure  a  revenue,  not  only 
because  the  lender  loses  during  the  time  of  the  loan  the 
revenue  he  might  have  secured  by  it,  not  only  because  he 
risks  his  capital,  not  only  because  the  borrower  may  em- 
ploy it  in  advantageous  purchases  or  in  undertakings  from 
which  he  will  draw  large  profits:  the  Proprietor  of  money 
may  properly  draw  the  interest  of  it  in  accordance  with  a 
more  general  and  more  decisive  principle.  Even  if  all  the 
foregoing  were  not  the  case,  he  would  none  the  less  have 
a  right  to  require  the  interest  of  the  loan,  simply  because 
his  money  is  his  own.  Since  it  is  his  own,  he  is  free  to 
keep  it;  nothing  makes  it  his  duty  to  lend:  if,  then,  he 
does  lend,  he  may  attach  to  his  loan  such  a  condition  as  he 
chooses.  In  this  he  does  no  wrong  to  the  borrower,  since 
the  latter  acquiesces  in  the  condition,  and  has  no  sort  of 
right  to  the  sum  lent.  The  profit  that  a  man  may  obtain 
by  the  use  of  the  money  is  doubtless  one  of  the  commonest 
motives  influencing  the  borrower  to  borrow  on  interest;  it 
is  one  of  the  sources  of  the  ease  he  finds  in  paying  this 
interest;  but  this  is  by  no  means  what  gives  a  right  to  the 
lender  to  require  it;  it  is  enough  for  him  that  his  money  is 
his  own,  and  this  right  is  inseparable  from  that  of  property. 
He  who  buys  bread  does  it  for  his  support;  but  the  right 
the  Baker  has  to  ask  a  price  is  quite  independent  of  this 


72  REFLECTIONS   ON   THE  FORMATION 

use  of  the  bread  :  it  is  the  same  right  as  he  would  have  to 
sell  him  stones;  a  right  founded  entirely  upon  this,  — that, 
as  the  bread  is  his  own,  nobody  has  a  right  to  oblige  him 
to  give  it  for  nothing. 

§.  LXXV. 

Reply  to  an  objection. 

This  reflection  makes  us  realise  how  false  and  how  dis- 
tant from  the  meaning  of  the  Gospel  is  the  application 
which  the  Rigorists  make  of  the  passage  Mutiium  date,  nihil 
inde  sperantes  (Lend,  hoping  for  nothing  again).  This  pas- 
sage is  clear  when  it  is  understood,  as  by  moderate  and 
reasonable  theologians,  as  a  precept  of  charity.  All  men 
ought  to  succour  one  another  :  a  rich  man  who,  when  he 
saw  his  fellow-creature  in  distress,  instead  of  providing  for 
his  wants  sold  him  his  assistance,  would  fail  alike  in  the 
duties  of  Christianity  and  in  those  of  humanity.  In  such  cir- 
cumstances charity  does  not  prescribe  only  lending  without 
interest;  it  commands  lending,  and  even  giving  if  he  needs 
it.  To  make  out  of  this  precept  of  charity  a  precept  of 
rigorous  justice  is  equally  repugnant  to  reason  and  the  sense 
of  the  text.  Those  whom  I  attack  here  do  not  maintain  that 
it  is  a  duty  of  (Christian)  justice  to  lend  one's  money;  they 
must  then  agree  that  the  first  words  of  the  passage  :  Mu- 
tiium date  .  .  .  ,  contain  only  a  precept  of  charity;  then, 
I  ask,  why  do  they  think  that  the  close  of  the  passage  grows 
into  a  duty  of  (Christian)  justice?  What,  shall  the  lending 
itself  not  be  a  strict  precept,  but  its  accessory,  the  con- 
dition of  the  loan,  be  made  one  !  Then  this  is  what  men 
were  told:  "You  are  free  to  lend  or  not  to  lend,  but,  if 


AND    THE  DISTRIBUTION  OF  RICHES  73 

you  lend,  take  care  you  do  not  take  any  interest  for  your 
money  ;  and  even  if  a  merchant  should  ask  a  loan  of  you 
for  an  undertaking  in  which  he  hopes  to  make  large  profits, 
it  will  be  a  crime  for  you  to  accept  the  interest  he  offers 
you;  you  must  absolutely  either  lend  to  him  gratuitously 
or  not  lend  to  him  at  all.  You  have  indeed  one  method 
of  making  interest  lawful  ;  that  is,  to  lend  your  capital  for 
an  indefinite  time,  and  to  give  up  the  right  of  demanding 
its  repayment,  and  leave  your  debtor  free  to  pay  you  when 
he  pleases  or  when  he  can.  If  you  find  any  inconvenience 
on  the  score  of  security,  or  if  you  foresee  that  you  will 
need  your  money  in  a  certain  number  of  years,  you  have 
no  other  course  to  take  but  not  to  lend.  It  will  be  better 
to  cause  this  merchant  to  miss  a  precious  opportunity  than 
to  commit  a  sin  so  as  to  help  him  to  take  advantage  of  it." 
See  what  has  been  discovered  in  these  five  words,  Mutuum 
date,  nihil  inde  sperantes,  when  they  have  been  looked  at 
through  the  prejudices  created  by  false  metaphysics.  Every 
man  who  reads  this  text  without  prejudice  will  see  what  it 
really  means  ;  and  that  is  :  "  As  men,  as  Christians,  you  are 
all  brothers,  all  friends;  act  toward  each  other  as  brethren 
and  friends;  help  each  other  in  your  necessities;  let  your 
purses  be  open  to  one  another,  and  do  not  sell  the  assist- 
ance which  you  owe  each  other  by  demanding  interest  for 
the  loan  which  charity  makes  your  duty."  This  is  the  true 
sense  of  the  passage  in  question.  The  obligation  to  lend 
without  interest  and  the  obligation  to  lend  are  evidently 
connected  together;  they  are  of  the  same  order;  and  both 
inculcate  a  duty  of  charity,  and  not  a  precept  of  rigorous 
justice  applicable  to  all  cases  in  which  lending  is  possible. 


74  REFLECTIONS   ON   THE  FORMATION 

§.    LXXVI. 

The  rate^  of  interest,  like  that  of  merchandise  generally, 
should  he  fixed  by  nothing  but  the  course  of  trade. 

I  have  already  said  that  the  price  of  borrowed  money  is 
regulated,  like  that  of  all  other  merchandise,  by  the  balance 
of  supply  and  demand  :  ^  thus,  when  there  are  many  bor- 
rowers who  need  money,  the  interest  of  money  becomes 
higher;  when  there  are  many  holders  of  money  who  offer 
to  lend  it,  interest  falls.  It  is,  therefore,  another  mistake 
to  suppose  that  the  interest  of  money  in  commerce  ought 
to  be  fixed  by  the  laws  of  Princes.  It  is  a  current  price, 
fixed  like  that  of  all  other  merchandise.  This  price  varies 
a  little,  according  to  the  greater  or  less  security  which  the 
borrower  has  that  he  will  not  lose  his  capital;  but,  with 
equal  security,  it  ought  to  rise  or  fall  in  proportion  to  the 
abundance  and  need,  and  the  law  ought  no  more  to  fix  the 
rate  of  the  interest  of  money  than  to  set  a  price  for  any 
other  merchandise  that  is  circulated  in  commerce. 

§.  LXXVII. 
Money^  has  two  different  valuations^  in  commerce:  the  one 
expresses  the  quantity  of  money  we  give  to  procure  the 
different  sorts  of  commodities  ;  the  other  expresses  the  rela- 
tion of  a  sum  of  mojiey  to  the  interest  it  procures  in 
accordance  with  the  course  of  commerce. 

1  Le  taux.  2  Par  la  balance  de  l'offre  à  la  demande. 

8  L'argent.  [The  use  of  this  word  both  for  money  and  for  silver  contrib- 
utes to  the  ambiguity  which  Turgot  here  seeks  to  remove.  It  is  here  trans- 
lated silver,  whenever  that  is  implied  by  the  context.] 

4  Evaluations. 


AND    THE  DISTRIBUTION  OF  RICHES  75 

It  would  seem,  from  this  explanation  of  the  way  in  which 
money  is  sold  or  let  for  an  annual  interest,  that  there  are 
two  ways  of  valuing  money  in  commerce.  In  purchases 
and  sales,  a  certain  weight  of  money  represents  a  certain 
quantity  of  values,  or  of  merchandise  of  every  kind  :  for 
example,  an  ounce  of  silver  is  the  equivalent  of  a  certain 
quantity  of  corn  or  a  certain  number  of  days'  labour.  In 
lending  and  in  the  money-trade,  a  capital  is  the  equivalent 
of  a  rent  equal  to  a  certain  fixed  portion  of  that  capital; 
and  conversely  an  annual  rent  represents  a  capital  equal  to 
the  amount  of  that  rent  repeated  a  certain  number  of  times, 
according  as  interest  is  at  a  higher  or  lower  penny. 

§.   LXXVIII. 

These  two  valuations  are  independent  of  each  other,  à^  are 
governed  by  quite  different  principles. 

These  two  different  reckonings  ^  have  much  less  connec- 
tion and  depend  much  less  on  each  other  than  one  would 
be  tempted  to  believe  at  first  sight.  Money  may  be  very 
common  in  ordinary  commerce,  may  there  have  very  little 
value,  may  answer  to  a  very  small  quantity  of  commodities, 
and  the  interest  of  money  may  at  the  same  time  be  very 
high. 

Suppose  that  when  there  are  a  million  ounces  of  silver 
circulating  in  commerce,  an  oimce  of  silver  is  given  in  the 
market  for  a  measure  of  corn.  Suppose  there  comes  into 
the  State,  it  matters  not  how,  a  second  million  ounces  of 
silver,  and  that  this  increase  is  distributed  to  every  purse 

1  Appréciations. 


76  REFLECTIONS   ON   THE  FORMATION 

,  1  in  the  same  proportion  as  the  first  million,  so  that  the  man 
who  before  had  two  ounces  of  silver  now  has  four.  The 
silver  considered  as  a  mass  of  metal  will  certainly  diminish 
ip  price,  or,  what  is  the  same  thing,  commodities  will  be 
paid  for  more  dearly;  and,  to  get  the  measure  of  corn 
which  we  got  before  with  an  ounce  of  silver,  it  will  be  nec- 
essary to  give  a  good  deal  more  silver,  and  perhaps  two 
ounces  instead  of  one.  But  it  by  no  means  will  follow  from 
thence  that  the  interest  of  money  falls,  if  all  this  money  is 
carried  to  market  and  employed  in  the  current  expenditure 
of  those  who  possess  it,  as  by  supposition  the  first  million 
ounces  were;  for  the  interest  of  money  falls  only  when  there 
is  more  money  to  lend,  in  proportion  to  the  wants  of  bor- 
rowers, than  there  was  before.  But  the  money  which  is 
carried  to  market  is  not  to  lend;  it  is  the  money  which  is 
placed  in  reserve,  the  accumulated  capitals,  that  are  lent; 
and  so  far  from  the  increase  of  money  in  the  market,  or  the 
diminution  of  its  price  in  relation  to  commodities  in  ordi- 
nary trade,  infallibly  and  by  immediate  sequence  bringing 
about  a  decrease  of  the  interest  of  money,  it  may  on  the 
contrary  happen  that  the  very  cause  which  increases  the 
money  in  the  market,  and  which  increases  the  prices  of 
other  commodities  by  lowering  the  price  of  money,  is  pre- 
cisely that  which  increases  the  hire  of  money  or  the  rate 
of  interest. 

Indeed,  suppose  for  the  moment  that  all  the  wealthy 
people  in  a  nation,  instead  of  saving  from  their  revenues 
or  from  their  annual  profits,  spend  the  whole  of  it;  suppose 
that,  not  content  with  spending  their  revenue,  they  spend 
their  capital;  suppose  a  man  who  has  a  hundred  thousand 


AND    THE  DISTRIBUTIOM  OF  RICHES  11 

francs  in  money,  instead  of  employing  them  in  a  profitable 
manner  or  lending  them,  consumes  them  piecemeal  in 
foolish  expenses;  it  is  evident  that,  on  one  side,  there  will 
be  more  money  employed  in  current  purchases,  in  the  sat- 
isfaction of  the  wants  or  humours  of  each  individual,  and 
that  consequently  its  price  will  fall;  on  the  other  hand, 
there  will  certainly  be  much  less  money  to  lend;  and,  as 
many  people  will  ruin  themselves,  there  will  probably  also 
be  more  borrowers.  The  interest  of  money  will,  then, 
increase,  while  money  will  become  more  common  on  the 
market  and  will  there  fall  in  price,  and  precisely  for  the 
same  reason. 

We  shall  cease  to  be  surprised  at  this  apparent  paradox,^ 
if  we  remember  that  the  money  which  is  offered  on  the 
market  to  get  corn  is  that  which  is  daily  spent  to  satisfy 
one's  needs,  and  that  the  money  which  is  offered  on  loan 
is  precisely  what  is  saved  from  one's  daily  expenditure  to 
be  laid  by  and  formed  into  capitals. 

§.  LXXIX. 

In  the  valuation  of  money  with  regard  to  commodities  it  is 
the  money  considered  as  metal  that  is  the  subject  of  the 
estimate.  In  the  valuation  of  the  "penny  "  of  money,  it 
is  the  use  of  the  money  during  a  definite  time  that  is  the 
subject  of  the  estitnate. 

In  the  market  a  measure  of  wheat  is  equivalent  to  ^  a  cer- 
tain weight  of  silver;  it  is  a  quantity  of  silver  that  one 
purchases  with  the  commodity;  it  is  this  quantity  on  which 

1  Bisarrerie.  *  Se  balance  avec. 


78  REFLECTIONS   ON   THE  FORMATION 

one  sets  a  price,  and  which  one  compares  with  other  and 
different  values.  In  a  loan  on  interest,  that  on  which  we 
set  a  price  is  the  use  of  a  certain  quantity  of  values  during 
a  certain  time.  It  is  no  longer  the  comparison  of  a  mass 
of  silver  with  a  mass  of  wheat;  it  is  now  a  mass  of  values 
which  is  compared  with  a  definite  portion  of  itself,  which 
becomes  the  price  of  the  use  of  this  mass  during  a  certain 
time.  Whether  twenty  thoiisatid  ounces  of  silver  are  on 
the  market  the  equivalent  of  tiventy  thousand  ??ieasures 
of  wheat  ox  only  of  ten  thousand,  the  use  of  these  twenty 
thousand  ounces  of  silver  during  the  year  will  none  the  less 
be  worth  in  the  money  market  the  twentieth  part  of  the 
principal  sum,  or  a  thousand  ounces  of  silver,  if  the  inter- 
est is  at  the  twentieth  penny?- 

§.   LXXX. 

The  price  of  interest'  depefids  immediately  upon  the  relation 
between  the  dejnand  of  the  borrowers  and  the  offer  of 
the  lenders  ;  &=  this  relation  depends  chiefly  on  the  quan- 
tity of  moveable  riches  accumulated,  by  the  saving  of  reve- 
nues 0^  of  annual  products,  to  form  capitals  withal,  whether 
these  capitals  exist  in  jnoney  or  in  any  other  kind  of  effects 
having  a  value  in  commerce. 

The  price  of  silver  in  the  market  is  relative  only  to  the 
quantity  of  this  metal  employed  in  current  exchanges;  but 
the  rate  of  interest  is  relative  to  the  quantity  of  values 
accumulated  and  laid  by  to  form  capitals.  It  is  indifferent 
whether  these  values  are  in  metal  or  in  other  effects,  pro- 

1  Au  denier  vingt,  i,e.  5  %.  2  Le  prix  de  l'intérêt. 


AND    THE  DISTRIBUTION  OF  RICHES  79 

vided  that  these  effects  are  easily  convertible  into  money. 
It  is  far  from  being  the  case  that  the  mass  of  metal  existing 
in  a  State  is  as  large  as  the  sum  of  the  values  lent  on 
interest  in  the  course  of  a  year:  on  theicontrary  all  the 
capitals  in  furniture,  in  merchandise,  in  tOisisj-in  cattle, 
take  the  place  of  the  silver  and  represent  it.  A  paper 
signed  by  a  man  who  has  well-known  effects  worth  a  hun- 
dred thousand  francs,  and  who  promises  to  pay  a  himdred 
thousand  francs  at  such  a  date,  passes  for  a  hundred  thou- 
sand francs  until  that  date  :  all  the  capitals  of  the  man  who 
has  signed  this  note  answer  for  the  payment,  whatever  may 
be  the  nature  of  the  effects  he  has  in  his  possession,  pro- 
vided they  have  a  value  of  a  hujidred  thousand  francs.  It 
is  not,  therefore,  the  quantity  of  silver  existing  as  metal 
which  causes  the  interest  of  money  to  rise  or  fall,  or  which 
brings  into  commerce  more  money  ready  to  be  lent;  it 
is  simply  the  sum  of  capitals  to  be  found  in  commerce, 
that  is  to  say,  the  actual  sum  of  moveable  values  of  every 
kind,  accumulated,  saved  bit  by  bit  ^  out  of  the  revenues 
and  profits,  to  be  employed  to  obtain  for  the  possessor  new 
revenues  and  new  profits.  It  is  these  accumulated  savings 
that  are  offered  to  borrowers,  and  the  more  there  are  of 
them  the  lower  is  the  rate  of  interest,  at  least  if  the  number 
of  borrowers  is  not  augmented  in  proportion. 

§.   LXXXI. 

The  spirit  of  economy  in  a  nation  continually  augments  the 
sum  of  capitals  ;  luxury  continually  tends  to  destroy  them. 

1  Successivement. 


80  REFLECTIONS   ON   THE   FORMATION 

The  spirit  of  economy  in  a  nation  tends  to  augment 
incessantly  the  sum  of  its  capitals,  to  increase  the  number 
of  lenders,  to  diminish  that  of  borrowers.  The  habit  of 
luxury  has  precisely  the  contrary  effect;  and,  from  what 
has  been  already  remarked  as  to  the  use  of  capitals  in  all 
the  enterprises  of  agriculture,  industry  or  commerce,  we 
may  judge  if  luxury  enriches  a  nation  or  impoverishes  it. 

§.   LXXXII. 

Hie  fall  in  the  rate  of  interest  proves  that,  in  general,  economy 
has  prevailed  over  luxury  in  Europe. 

Since  the  interest  of  money  has  been  constantly  dimin- 
ishing in  Europe  for  some  centuries,  we  must  conclude 
that  the  spirit  of  economy  has  been  more  general  than  the 
spirit  of  luxury.  It  is  only  people  already  rich  who  give 
themselves  up  to  luxury;  and,  even  among  the  rich,  all  who 
are  sensible  limit  themselves  to  the  spending  of  their  reve- 
nue, and  are  very  careful  not  to  touch  their  capitals.  Those 
who  wish  to  become  rich  are  far  more  numerous  in  a  nation 
than  those  who  are  already  so  :  but,  in  the  present  state  of 
things,  in  which  all  the  lands  are  occupied,  there  is  but 
one  way  to  become  rich;  it  is  either  to  possess  or  to  pro- 
cure, in  some  way  or  other,  a  revenue  or  an  annual  profit 
above  what  is  absolutely  necessary  for  subsistence,  and  to 
lay  up  this  superfluity  every  year  so  as  to  form  a  capital 
out  of  it;  by  means  whereof  one  may  obtain  an  increase  of 
revenue  or  of  annual  profit,  which  one  may  again  save  and 
convert  into  capital.  There  are,  consequently,  a  great  num- 
ber of  men  interested  and  occupied  in  amassing  capitals. 


AND    THE  DISTRIBUTION  OF  RICHES  81 

§.   LXXXIII. 

Recapitulation  of  the  five  different  methods  of  employing 
capitals. 

I  I  have  reckoned  five  different  methods  of  employing 
capitals  or  of  profitably  investing  them. 

The  first  is  to  biiy  a  landed  estate  which  brings  in  a 
definite  revenue.^ 

The   second    is   to   invest  one^^_nioney  in  agricultural 

/  undertakings,  by  taking  a  lease  of  lands,  —  the  produce  of 

'    which  ought  to  yield,  over   and  above   the  price  of  the 

lease,  the  interest  on  the  advances  and  the  price  of  the 

labour  of  the  man  who  devotes  his  riches  and  his  toil  to 

their  cultivation. 

The  third  is  to  in3L£st  one's  capital  in  industrial  or 
manufacturing  undertakings. 

The  fourth  is  to  invest  it  in  commercial  undertakings. 

And  the  fifth  isto  lendJUxi  those  who  want  it,  in  return 
for  an  annual  interest. 

§.  LXXXIV. 

The  influence  on  one  another  of  the  differejtt  employments  of 
fnoney. 

It  is  evident  that  the  annual  products  that  can  be  drawn 
from  capitals  invested  in  these  different  employments  are 
limited  by  one  another,  and  are  all  influenced  by-  the 
actual  rate  of  the  interest  of  money. 

1  Un  certain  revenu.  2  Sont  relatifs  au. 

G 


82  REFLECTIONS   ON   THE  FORMATION 

§.   LXXXV. 

Money  invested  in  land  is  bound  to  bring^  the  least. 

The  man  who  invests  his  money  in  the  purchase  of  an 
estate  which  is  leased  to  an  entirely  solvent  Farmer  procures 
himself  a  revenue  which  gives  him  very  little  trouble  to 
receive,  and  which  he  can  spend  in  the  most  agreeable 
manner  by  giving  free  play  to  all  his  tastes.  There  is  the 
additional  advantage  that  land  is  of  all  forms  of  property 
that  whereof  the  possession  is  most  secured  against  every 
kind  of  accident. 

§.   LXXXVI. 

Money  placed  on  loati  is  bound  to  bring  rather  more  than 
the  revenue  of  landed  estates  acquired  with  an  equal 
capital. 

He  who  lends  his  money  on  interest  has  an  even  more 
peaceable  and  free  enjoyment  of  it  than  the  possessor  of 
land;  but  the  insolvency  of  his  debtor  may  cause  him  to 
lose  his  capital.  He  will  not,  therefore,  content  himself 
with  an  interest  equal  to  the  revenue  of  the  land  which  he 
might  buy  with  the  same  capital.  The  interest  of  money 
placed  on  loan  must,  consequently,  be  larger  than  the  reve- 
nue of  an  estate  purchased  with  the  same  capital;  for  if 
the  lender  found  an  estate  for  sale  with  a  revenue  equal  to 
the  interest,  he  would  prefer  that  way  of  using  it. 

1  Doit  rapporter. 


AND    THE  DISTRIBUTION  OF  RICHES  83 

§.   LXXXVII. 

Money  invested  in  agricultural,  tnanufacturing,  à^  com- 
mercial u7ulertakings  is  bound  to  bring  more  than  the 
interest  of  money  on  loan. 

For  a  like  reason  money  employed  in  agriculture,  in 
industry,  or  in  commerce  must  produce  a  profit  which  is 
more  considerable  than  the  revenue  of  the  same  capital 
when  invested  in  land,  or  the  interest  of  the  same  money 
placed  on  loan;  for  as  these  employments,  besides  the 
capital  advanced,  require  much  care  and  labour,  if  they 
were  not  more  lucrative  it  would  be  much  better  to  procure 
a  revenue  of  equal  amount  which  might  be  enjoyed  without 
needing  to  do  anything.  It  is  necessary,  then,  that  besides 
the  interest  of  his  capital  the  undertaker  should  every  year 
draw  a  profit  to  recompense  him  for  his  care,  his  labour, 
his  talents  and  his  risks,  and  to  furnish  him  in  addition 
with  that  wherewith  he  may  replace  the  annual  wear  and 
tear  of  his  advances,  — which  he  is  obliged  to  convert  from 
the  very  first  into  effects  which  are  susceptible  of  change, 
and  which  are,  moreover,  exposed  to  every  kind  of  accident. 


V--V  ^ 


C.v'^'^^^^^-^^l'^tr' 


§.    LXXXVIII.  >'V.<V  ^  '     _     -  .      V  \^^ 

Nevertheless  the  products  of  these  different  etnployments  are  1  j 
limited  by  one  another,  6^,  notwithstanding  their  ine-  |  \ 
quality,  preserve  a  kind  of  equilibrium. 

The  different  employments  of  capitals  produce,  therefore, 
very  unequal  products;  but  this  inequality  does  not  prevent 
the  exercise  of  a  reciprocal  influence  one  upon  the  other, 


84  REFLECTIONS   ON   THE  FORMATION 

or  the  establishment  between  them  of  a  sort  of  equilibrium, 
as  between  two  liquids  of  unequal  gravity  which  communi- 
cate with  one  another  at  the  bottom  of  a  reversed  syphon 
of  which  they  occupy  the  two  branches;  they  will  not  be 
on  a  level,  but  the  height  of  one  cannot  increase  without  the 
other  also  rising  in  the  opposite  branch. 

Suppose  that  all  of  a  sudden  a  very  large  number  of  pro- 
prietors of  lands  wish  to  sell  them.  It  is  evident  that 
the  price  of  lands  will  fall,  and  that  with  a  less  sum  one 
will  acquire  a  larger  revenue:  this  cannot  come  to  pass 
without  the  interest  of  money  rising,  for  the  possessors  of 
money  would  choose  rather  to  buy  estates  than  to  lend 
at  an  interest  which  was  no  higher  than  the  revenue  of 
the  land  they  could  purchase.  If,  then,  the  borrowers 
want  to  have  money,  they  will  be  constrained  to  pay  a 
higher  rate  of  hire  for  it.  If  the  interest  of  money  becomes 
higher,  people  will  prefer  lending  it  to  making  use  of  it  in 
a  more  toilsome  and  hazardous  fashion  in  agricultural,  in- 
dustrial and  commercial  undertakings;  and  those  undertak- 
ings only  will  be  entered  upon  which  will  produce,  besides 
the  wages  of  their  labour,  a  profit  much  greater  than  the 
rate  of  money  placed  on  loan.  In  a  word,  as  soon  as  the 
profits  resulting  from  an  employment  of  money,  whatever 
it  may  be,  increase  or  diminish,  capitals  turn  in  that  direc- 
tion and  withdraw  from  other  employments,  or  withdraw 
and  turn  toward  other  employments;  and  this  necessarily 
alters  in  each  of  these  employments  the  relation  betweerl 
the  capital  and  the  annual  produce.  In  general,  money 
invested  in  landed  property  brings  less  than  money  placed 
on  loan,  and  money  placed  on  loan  brings  less  than  money 


I 


AND    THE  DISTRIBUTION  OF  RICHES  85 

employed  in  undertakings  which  involve  labour;  but, 
whatever  be  the  way  in  which  money  is  employed,  its 
produce  cannot  increase  or  decrease  without  all  the  other 
employments  experiencing  a  proportionate  increase  or 
decrease. 

§.  LXXXIX. 

The  current  interest  of  money  is  the  thermometer  by  which 
07ie  may  judge  of  the  abundance  or  scarcity  of  capitals  ;  it 
is  the  measure  of  the  extent  a  Nation  can  give  to  its  enter- 
prises in  agriculture,  manufacture  àr'  commerce. 

The  current  interest  on  money  placed  on  loan  can,  then, 
be  regarded  as  a  kind  of  thermometer  of  the  abundance  or 
scarcity  of  capitals  in  a  Nation,  and  of  the  extent  of  the 
undertakings  of  every  sort  on  which  it  may  embark.  It  is 
evident  that  the  lower  the  interest  of  money  is,  the  greater 
is  the  value  of  landed  estates.  A  man  who  has  a  rent-roll 
of  fifty  thousand  livres  has  a  property  worth  only  a  million, 
if  estates  are  sold  at  the  twentieth  penny;  he  has  two  mil- 
lions if  estates  are  sold  at  the  fortieth  penny.  If  interest 
is  at  five  per  cent,  all  uncleared  land  whose  produce  would 
not  bring  five  per  cent.,  over  and  above  the  replacement  of 
the  advances  and  the  recompense  for  the  care  of  the  Culti- 
vator, would  remain  uncultivated.  No  manufacture,  no 
commerce  will  maintain  itself  which  will  not  bring  in  five 
per  cent.,  over  and  above  the  wages  of  the  undertaker's 
exertions  and  the  risks.  If  there  is  a  neighbouring  Nation 
in  which  the  interest  of  money  is  only  two  per  cent.,  not 
only  will  it  carry  on  all  the  branches  of  commerce  from 
which  the  Nation  where  interest  is  at  five  per  cent,  finds 


\ 


86  REFLECTIONS   ON   THE  FORMATION 

itself  excluded,  but,  moreover,  as  its  manufacturers  and 
merchants  can  content  themselves  with  a  lower  profit,  they 
will  place  their  commodities  on  all  the  markets  at  a  much 
lower  price,  and  will  draw  to  themselves  the  almost  exclu- 
sive trade  in  all  those  commodities  whereof  the  trade  is 
not  retained  for  the  commerce  of  the  Nation,  where  money 
is  worth  five  per  cent.,  by  exceptional  conditions  or  by  the 
excessive  expense  of  carriage. 

§.  XC. 

Influence  of  the  rate  of  interest  of  money  on  all  gainful 
undertakings. 

The  price  of  interest  may  be  looked  upon  as  a  kind  of 
level  beneath  which  all  labour,  all  agriculture,  all  industry, 
all  commerce  come  to  an  end.  It  is  like  a  sea  spread  over 
a  vast  area  :  the  summits  of  the  mountains  rise  above  the 
waters,  and  form  fertile  and  cultivated  islands.  If  this  sea 
happens  to  roll  back,  in  proportion  as  it  descends,  first  the 
slopes  of  the  hills,  then  the  plains  and  the  valleys,  appear, 
and  are  covered  with  every  kind  of  produce.  It  is  enough 
that  the  water  should  rise  or  fall  a  foot  to  inundate  im- 
mense tracts,  or  throw  them  open  to  agriculture.  It  is  the 
abundance  of  capitals  which  animates  all  undertakings; 
and  the  low  interest  of  money  is  at  once  the  effect  and  the 
indication  of  the  abundance  of  capitals. 

§.  XCI. 

The  total  wealth  of  a  nation  is  composed  :  ist,  of  the  net  reve- 
nue of  all  the  estates  in  land,  multiplied  by  the  rate  at  which 


AND    THE  DISTRIBUTION  OF  RICHES  87 

land  is  sold  ;  ^  2d,  of  the  sum  of  all  the  moveable  riches  ex- 
isting in  the  nation. 

Estates  in  land  are  equivalent  to  a  capital  equal  to  their 
annual  revenue  multiplied  by  the  current  penny  at  which 
lands  are  sold.  If,  then,  we  add  up  the  revenue  of  all  lands, 
that  is  to  say,  the  net  revenue  they  return  to  the  proprietors 
and  to  all  those  who  share  in  their  ownership,^  such  as 
the  Seigneur  who  takes  a  rent,  the  Parson  ^  who  takes  the 
tithe,  the  Sovereign  who  takes  the  taxes;  if,  I  say,  we 
add  up  all  these  sums,  and  multiply  them  by  the  rate  at 
which  lands  are  sold,^  we  shall  have  the  sum  of  the  riches 
of  the  nation  in  landed  property.  To  obtain  the  total  of 
a  nation's  riches,  we  have  to  add  to  that  the  moveable 
riches;  which  consist  of  the  sum  of  the  capitals  employed  in 
all  the  enterprises  of  agriculture,  industry  and  commerce, 
and  which  never  come  out  of  them,  since  all  advances  in 
every  kind  of  enterprise  must  needs  incessantly  return  to 
the  undertakers  to  be  incessantly  put  back  into  the  under- 
taking, as  otherwise  it  could  not  continue.  It  would  be 
a  very  gross  error  to  confound  the  immense  mass  of  these 
moveable  riches  with  the  mass  of  money  that  exists  in 
a  State;  the  latter  is  but  a  very  small  thing  in  compari- 
son. To  convince  one's  self  of  this  we  need  only  remem- 
ber the  immense  quantity  of  beasts,  utensils  and  seed  which 
constitute  the  advances  of  agriculture;  of  materials,  tools, 
furniture  of  all  sorts  which  constitute  the  stocks  ^  of  the 
manufacturers,  and  which  f\ll  the  warehouses  of  all  the  mer- 

1  Par  le  taux  du  prix  des  terres.  4  jg  the  number  of  years'  purchase. 

2  Qui  en  partagent  la  propriété.  ^  Lg  fonds. 
8  Le  Curé. 


s 


88  REFLECTIONS   ON  THE  FORMATION 

chants  and  of  all  those  engaged  in  trade;  and  one  will 
realise  that,  in  the  totality  of  the  riches,  landed  and  move- 
able, of  a  nation,  the  specie  ^  makes  a  very  small  part.  But 
as  all  these  riches  and  money  are  continually  exchangeable, 
they  all  represent  money,  and  money  represents  them  all. 

§.  XCII. 

The  amount  of  capitals  on  loan  cannot  be  included  in  this 
total  without  being  reckoned  twice  over. 

We  must  not  include  in  our  calculation  of  the  riches  of 
the  nation  the  amount  of  capitals  which  are  placed  on  loan; 
for  these  capitals  can  only  have  been  lent  to  proprietors  of 
lands,  or  to  undertakers  who  make  use  of  them  in  their 
business,  since  it  is  only  these  two  kinds  of  people  that 
can  answer  for  a  capital  and  pay  the  interest:  a  sum  of 
money  lent  to  people  who  had  neither  estate  nor  industry 
would  be  a  dead  capital  and  not  an  active  one.'^  If  the 
proprietor  of  an  estate  of  four  hundred  thousand  francs 
borrows  a  hundred  upon  it,  his  land  is  charged  with  a  rent 
which  diminishes  his  revenue  in  like  proportion;  and  if  he 
sold  his  property,  out  of  the  four  thousand  francs  he  would 
receive,  a  hundred  would  belong  to  the  creditor.  The 
capital  of  the  lender  would  occupy,  then,  in  the  calculation 
of  existing  wealth  the  same  place  as  an  equal  part  of  the 
value  of  the  land.  The  land  is  always  worth  four  hundred 
thousand  francs  :  when  the  proprietor  has  borrowed  a 
hundred  thousand  francs,  this  does  not  make  five  hundred 

1  L'argent  en  nature. 

2  Un  capital  éteint  et  non  un  capital  employé. 


AND    THE  DISTRIBUTION  OF  RICHES  89 

thousand  francs;  it  only  brings  it  about  that  out  of  the  four 
hundred  thousand  francs  a  hundred  belong  to  the  lender, 
and  that  the  borrower  no  longer  owns  more  than  three 
hundred. 

The  same  double  reckoning  would  take  place  if  we 
included  in  the  total  sum  of  capitals  the  money  lent  to  an 
undertaker  to  be  employed  in  the  advances  of  his  enter- 
prise; for  this  loan  does  not  increase  the  total  sum  of  the 
advances  necessary  for  the  enterprise,  it  only  brings  it 
about  that  that  sum,  and  the  part  of  the  profits  which  repre- 
sents its  interest,  belong  to  the  lender.  Whether  a  merchant 
employs  ten  thousand  francs  of  his  own  property  in  his  trade 
and  takes  the  whole  profit,  or  whether  he  has  borrowed 
these  ten  thousand  francs  from  another  to  whom  he  pays 
the  interest,  contenting  himself  with  the  surplus  of  the 
profit  and  with  the  wages  for  his  industry,  there  are  never 
more  than  ten  thousand  francs. 

But  though  we  cannot  include,  in  calculating  the  riches 
of  a  nation,  the  capital  which  corresponds  to  the  interests 
of  money  placed  on  loan  ^  without  reckoning  it  twice  over, 
we  ought  to  include  all  the  other  moveable  property,  which, 
although  they  formed  originally  the  occasion  of  expenditure 
and  bear  no  profit,  nevertheless  form,  from  their  duration, 
a  true  capital  which  is  constantly  accumulating  and  which, 
inasmuch  as  it  can  at  need  be  exchanged  for  money,  makes, 
as  it  were,  a  reserve  fund  which  may  enter  into  commerce, 
and,  when  one  pleases,  make  up  for  the  loss  of  other  capi- 
tals. Among  these  may  be  mentioned  furniture  of  all 
kinds,  jewels,  plate,  paintings,  statues,  ready  money  shut 
1  Le  capital  des  intérêts  de  l'argent  prêté. 


90  REFLECTIONS   ON   THE  FORMATION 

Up  in  the  chests  of  misers  :  all  these  things  have  a  value,  and 
the  sum  of  all  these  values  may  reach  a  considerable  amount 
in  rich  nations;  but,  considerable  or  no,  it  is  still  true  that 
it  ought  to  be  added  to  the  sum  of  the  price  of  landed 
estates,  and  to  that  of  the  advances  circulating  in  enter- 
prise of  every  kind,  in  order  to  make  up  the  sum  total  of 
the  riches  of  a  nation.  However,  it  is  not  necessary  to  say 
that,  although  we  may  very  well  define,  as  we  have  just  done, 
wherein  the  sum  of  the  riches  of  a  nation  consists,  it  is 
probably  impossible  to  discover  how  much  they  amount  to; 
at  least  so  long  as  one  does  not  find  some  rule  whereby  to 
determine  the  relation  between  the  total  commerce  of  a 
nation  and  the  revenue  of  its  lands  :  a  thing  perhaps  feasi- 
ble, but  which  has  not  yet  been  executed  in  such  a  way  as 
to  dispel  all  doubts. 

§.  XCIII. 

In  which  of  the  three  classes  of  the  Society  the   capitalist 
lenders  of  money  are  to  be  placed. 

Let  us  see  now  how  this  exposition  of  the  different  ways 
of  employing  capitals  agrees  with  what  we  have  before 
established  as  to  the  division  of  all  the  members  of  the 
Society  into  three  classes,  the  productive  class  or  that  of 
the  husbandmen,  the  industrial  or  commercial  class  and 
the  disposable  class  or  that  of  the  proprietors. 

§.  XCIV. 

The  capitalist  lender  of  money  belongs  to  the  disposable  class, 
so  far  as  his  person  is  concerned. 


AND    THE  DISTRIBUTJOiV  OF  RICHES  91 

We  have  seen  that  every  rich  man  is  necessarily  the  pos- 
sessor either  of  a  capital  in  moveable  riches,  or  of  an  estate 
in  land  equivalent  to  a  capital.  Every  landed  estate  is 
the  equivalent  of  a  capital;  consequently  every  proprietor 
is  a  capitalist,  but  every  capitalist  is  not  the  proprietor  of 
a  landed  estate;  and  the  possessor  of  a  moveable  capital 
has  his  choice  whether  he  will  employ  it  in  acquiring  an 
estate  or  put  it  to  a  profitable  use  in  the  undertakings  of 
the  agricultural  or  industrial  class.  The  capitalist  who  has 
become  an  undertaker  either  in  agriculture  or  in  industry 
is  no  more  disposable  —  either  as  regards  himself  or  his 
profits  —  than  the  mere  workman  of  these  two  classes;  both 
are  set  aside  for  ^  the  carrying  on  of  their  enterprises.  The 
capitalist  who  limits  himself  to  being  a  lender  of  money, 
lends  either  to  a  proprietor  or  to  an  undertaker.  If  he 
lends  to  a  proprietor,  he  would  seem  to  belong  to  the  class 
of  proprietors;  he  becomes  part-owner  of  the  property;  the 
revenue  of  the  land  is  burdened  by^  the  payment  of  the 
interest  of  his  loan;  the  value  of  the  estate  is  pledged^ 
to  provide  security  for  his  capital  to  the  full  amount.  If 
the  lender  of  money  has  lent  to  an  undertaker,  it  is  certain 
that  his  person  belongs  to  the  disposable  class,  but  his 
capital  is  sunk  in^  the  advances  of  the  enterprise,  and  can- 
not be  withdrawn  from  it  without  injuring  the  enterprise, 
unless  it  is  replaced  by  a  capital  of  equal  value. 

1  [The  four  expressions  to  whicli  this  note  is  attached  are  all  attempts  to 
indicate  the  various  shades  of  meaning  of  the  one  French  expression,  af- 
fecté a.] 


92  REFLECTIONS   ON  THE  FORMATION 

§.   XCV. 

The  interest  drawn  by  the  lender  of  money  is  disposable,  so 
far  as  concerns  the  use  he  can  make  of  it. 

The  interest,  it  is  true,  which  he  draws  from  that  capital 
seems  to  be  disposable,  since  the  undertaker  and  the 
undertaking  can  do  without  it;  and  it  seems  also  that  we 
may  conclude  from  this  that  in  the  profits  of  the  two  work- 
ing classes,  whether  they  are  employed  in  agriculture  or  in 
industry,  there  is  a  portion  that  is  disposable,  to  wit,  that 
which  corresponds  to  the  interest  of  the  advances  calculated 
at  the  current  rate  of  interest  on  money  placed  on  loan; 
and  it  appears,  moreover,  that  this  conclusion  is  in  con- 
flict with  what  we  have  before  said,  that  only  the  class  of 
proprietors  had  a  revenue  properly  so  called,  a  disposable 
revenue,  and  that  all  the  members  of  the  two  other  classes 
had  only  wages  or  profits.  This  deserves  some  explana- 
tion. When  one  looks  at  the  thousand  crowns  drawn  every 
year  by  a  man  who  has  lent  sixty  thousand  francs  to  a 
merchant,  and  considers  the  use  he  can  make  of  them,  we 
cannot  doubt  that  they  are  absolutely  disposable,  since  the 
undertaking  can  do  without  them. 

§.   XCVI. 
The  interest  of  money  is  not  disposable  in  this  sense,  that 
the  State  can  without  harm  appropriate  part  of  it  for  its 

wants. 

But  it  does  not  follow  that  they  are  disposable  in  the 
sense  that  the  State  can  with  impunity  appropriate  part  of 
them  for  the  public  wants.     These  thousand  crowns  are  not 


AND    THE  DISTRIBUTION  OF  RICHES  93 

a  return  that  agriculture  or  commerce  gratuitously  furnishes 
to  him  who  has  made  the  advances;  it  is  the  price  and 
condition  of  that  advance,  without  which  the  enterprise 
could  not  be  carried  on.  If  this  return  is  diminished,  tht 
capitalist  will  withdraw  his  money,  and  the  undertaking  wiK 
come  to  an  end.  This  return  ^  ought,  then,  to  be  inviolable, 
and  enjoy  an  entire  immunity,  because  it  is  the  price  of 
an  advance,  made  to  an  undertaking,  without  which  the 
undertaking  could  not  go  on.  To  touch  it,  would  be  to 
augment  the  price  of  advances  in  all  undertakings,  and 
consequently  to  lessen  the  undertakings  themselves,  that  is 
to  say,  agriculture,  industry  and  commerce. 

This  should  lead  us  to  conclude  that  when  we  said  that 
the  capitalist  who  had  lent  to  a  proprietor  appeared  to 
belong  to  the  proprietary  class,  this  appearance  had  some- 
thing equivocal  in  it  which  needed  to  be  unravelled.  In 
fact  the  exact  truth  is  that  the  interest  of  his  money  is  no 
more  disposable,  that  is  to  say,  is  no  more  capable  of  being 
encroached  upon  than  is  that  of  the  money  lent  to  un- 
dertakers of  agriculture  and  commerce.  This  interest  is 
equally  the  price  of  a  free  agreement,  and  is  equally  inca- 
pable of  being  encroached  upon  without  altering  the  price 
at  which  money  is  lent  :  for  it  matters  little  to  whom  the 
loan  has  been  made;  if  the  price  of  the  loan  changes  and 
increases  for  the  proprietor,  it  will  change  and  increase  for 
the  husbandman,  the  manufacturer,  and  the  merchant.  In 
a  word,  the  capitalist  lender  of  money  ought  to  be  con- 
sidered as  a  dealer  in  a  commodity  which  is  absolutely 
necessary  for  the  production  of  wealth,  and  which  cannot 

1  Rétribution. 


94  REFLECTIONS    ON   THE  FORMATION 

be  at  too  low  a  price.  It  will  be  as  unreasonable  to  burden 
his  trade  with  a  tax  as  to  lay  a  tax  on  the  dung-hill  which 
serves  to  manure  the  land.  Let  us  conclude  from  hence 
that,  while  it  is  true  that  the  lender  of  money  belongs  to 
the  disposable  class  so  far  as  his  person  is  concerned,  be- 
cause he  is  engaged  in  no  business,  he  does  not  belong  to 
it  so  far  as  the  character  of  his  wealth  is  concerned; 
whether  the  interest  of  his  money  is  paid  by  the  proprietor 
of  lands  from  a  part  of  his  revenue,  or  is  paid  by  an  under- 
taker from  the  part  of  his  profits  which  is  pledged  to  pro- 
vide the  interest  on  the  advances. 

§.  XCVII. 

Objection. 

It  will  doubtless  be  replied  that  the  capitalist  may  in- 
differently either  lend  his  money  or  employ  it  in  the  pur- 
chase of  land;  that  in  the  one  case  and  in  the  other  he 
draws  nothing  but  a  price  which  is  the  equivalent  of  his 
money,  and  that,  in  whichever  way  he  may  have  employed 
it,  he  ought  none  the  less  to  contribute  to  the  public  charges. 

§.   XCVIII. 

Answer  to  the  objection. 

I  reply,  in  the  first  place,  that  it  is  true  that,  when  the 
capitalist  has  purchased  an  estate,  the  revenue  is  the  equiva- 
lent to  him  of  what  he  would  have  drawn  from  his  money 
if  he  had  lent  it;  but  there  is  this  essential  difference  for 
the  State  —  that  the  price  he  gives  for  his  land  does  not  con- 
tribute in  any  way  to  the  revenue  it  produces;  it  would  not 


AND    THE  DISTRIBUTION   OF  RICHES  95 

have  given  less  revenue  if  he  had  not  purchased  it:  this 
revenue  is,  as  we  have  explained,  what  the  earth  gives  over 
and  above  the  wages  of  the  cultivators,  their  profits  and 
the  interest  on  their  advances.  It  is  not  the  same  with  the 
interest  of  a  loan;  it  is  the  very  condition  of  the  loan,  the 
price  of  the  advance,  without  which  neither  the  revenue 
nor  the  profits  which  serve  to  pay  it  would  have  existed. 

I  answer,  in  the  second  place,  that  if  lands  alone  were 
burdened  with  contribution  to  the  public  charges,  as  soon 
as  this  contribution  was  regulated  the  capitalist  who  pur- 
chased lands  would  not  reckon  in  the  interest  of  his  money 
the  part  of  the  revenue  which  had  to  be  set  aside  for  this 
contribution  :  in  the  same  way  that  a  man  who  purchases 
a  piece  of  land  to-day  does  not  buy  the  tithe  the  Par- 
son receives,  or  even  the  tax  so  far  as  is  known,  but 
only  the  revenue  which  remains  when  tithe  and  tax  are 
deducted. 

§.  XCIX. 

There  exists  no  truly  disposable  revenue  in  a  State  except 
the  net  produce  of  lands. 

We  see,  by  what  has  been  said,  that  the  interest  of  money 
placed  on  loan  is  taken  either  from  the  revenue  of  lands 
or  from  the  profits  of  undertakings  in  agriculture,  industry 
or  commerce.  But  as  to  these  profits  themselves,  we  have 
already  shown  that  they  were  only  a  part  of  the  produce  of 
lands;  that  the  produce  of  lands  falls  into  two  parts;  that 
one  was  set  aside  for  ^  the  wages  of  the  cultivator,  for  his 
profits,  and  for  the  return  of  his  advances  and  the  interest 
1  Aifectée  aux. 


96  REFLECTIONS   ON   THE  FORMATION 

upon  them  :  and  that  the  other  was  the  share  of  the  pro- 
prietor, that  is  to  say,  the  revenue  the  proprietor  expended 
at  his  pleasure,  and  from  which  he  contributed  to  the 
general  expenses  of  the  State.  We  have  shown  that  all  that 
the  other  classes  of  the  Society  receive  is  merely  the  wages 
and  the  profits  that  are  paid  either  by  the  proprietor  from 
his  revenue,  or  by  the  agents  of  the  productive  class  from 
the  part  which  is  set  aside  to  satisfy  their  needs,  for  which 
they  are  obliged  to  purchase  commodities  from  the  indus- 
trial class.  Whether  these  profits  be  distributed  in  wages 
to  workmen,  in  profits  to  undertakers,  or  in  interest  upon 
advances,  they  do  not  change  their  nature,  and  do  not  in- 
crease the  sum  of  the  revenue  produced  by  the  productive 
class  over  and  above  the  price  of  its  labour,  —  in  which 
sum  the  industrial  class  participates  only  to  the  extent  of 
the  price  of  its  labour. 

The  proposition,  then,  remains  unshaken  that  there  is  no 
revenue  save  the  net  produce  of  lands,  and  that  all  other 
annual  profit  is  either  paid  by  the  revenue,  or  forms  part  of 
the  expenditure  which  serves  to  produce  the  revenue. 


§.  C. 

The  land  has  also  furnished  the  whole  amount  of  moveable 
riches,  or  capitals,  in  existence,  h'  these  are  formed  only 
by  part  of  its  produce  being  saved  every  year. 

Not  only  does  there  not  exist  nor  can  there  exist  any 
other  revenue  than  the  net  produce  of  lands,  but  it  is  also 
the  land  which  has  furnished  all  the  capitals  which  make 


AND    THE  DISTRIBUTION  OF  RICHES  97 

up  the  sum  of  all  the  advances  of  agriculture  and  com-  ^ 
merce.  It  was  that  which  offered  without  tillage  the  first 
rude  advances  which  were  indispensable  for  the  earliest 
labours;  all  the  rest  is  the  accumulated  fruit  of  the  economy 
of  the  centuries  that  have  followed  one  another  since  man 
began  to  cultivate  the  earth.  This  economizing  has  doubt- 
less taken  place  not  only  out  of  the  revenues  of  the  pro- 
prietors, but  also  out  of  the  profits  of  all  the  members 
of  the  working  classes.  It  is  even  generally  true  that, 
although  the  proprietors  have  a  greater  superfluity,  they 
save  less  because  as  they  have  more  leisure,  they  have  more 
desires  and  more  passions;  they  regard  themselves  as  more 
assured  of  their  fortunes;  they  think  more  about  enjoying 
it  agreeably  than  about  increasing  it:  luxury  is  their  in- 
heritance. The  wage-receivers,^  and  especially  the  under- 
takers of  the  other  classes,  who  receive  profits  proportion- 
ate to  their  advances,  to  their  talent  and  to  their  activity, 
although  they  have  no  revenue  properly  so  called,  have  yet 
a  superfluity  beyond  their  subsistence;  and  almost  all  of 
them,  devoted  as  they  are  to  their  undertakings,  occupied 
in  increasing  their  fortunes,  removed  by  their  labour  from 
expensive  amusements  and  passions,  save  all  their  super- 
fluity to  invest  it  again  in  their  business  and  so  increase 
it.  Most  of  the  undertakers  in  agriculture  borrow  little, 
and  scarcely  any  of  them  seek  to  make  a  profitable  employ- 
ment of  anything  but  their  own  funds.  The  undertakers 
in  other  employments,  who  wish  to  make  their  fortunes 
stable,  also  try  to  get  into  the  same  position;  and,  unless 
they  have  great  ability,   those  who  carry  on  their   enter- 

1  Les  salariés. 
K 


98  REFLECTIONS   ON   THE  FORMATION 

prises  upon  borrowed  funds  run  great  risk  of  failing.  But, 
although  capitals  are  partly  formed  by  saving  from  the 
profits  of  the  working  classes,  yet,  as  these  profits  always 
come  from  the  earth,  —  inasmuch  as  they  are  all  paid, 
either  from  the  revenue,  or  as  part  of  the  expenditure 
which  serves  to  produce  the  revenue,  —  it  is  evident  that 
capitals  come  from  the  land  just  as  much  as  the  revenue 
does;  or,  rather,  that  they  are  nothing  but  the  accumula- 
tion of  the  part  of  the  values  produced  by  the  land  that 
the  proprietors  of  the  revenue,  or  those  who  share  it  with 
them,  can  lay  by  every  year  without  using  it  for  the  satis- 
faction of  their  wants. 

§.  CI. 

Although  money  is  the  immediate  subject  of  saving^  and  is, 
so  to  speak,  the  first  material  of  capitals  when  they  are 
being  formed,  specie  forms  butaii  almost  inappreciable  part 
of  the  sum  total  of  capitals. 

We  have  seen  that  money  plays  scarcely  any  part  in  the 
sum  total  of  existing  capitals;  but  it  plays  a  great  part  in 
the  formation  of  capitals.  In  fact,  armôst"  alT  savings  are 
made  in  nothing  but  money;  it  is  in  money  that  the  reve- 
nues come  to  the  proprietors,  that  the  advances  and  the 
profits  return  to  undertakers  of  every  kind;  it  is,  therefore, 
from  money  that  they  save,  and  the  annual  increase  of 
capitals  takes  place  in  money  :  but  none  of  the  undertakers 
make  any  other  use  of  it  than  to  convert  it  i??i7nediately 
into  the  different  kinds  of  effects  upon  which  their  under- 

1  D'épargne. 


AND    THE  DISTRIBUTION  OF  RICHES  99 

taking  depends;  and  thus  this  money  returns  to  circula- 
tion, and  the  greater  part  of  capitals  exists  only  in  effects 
of  different  kinds,  as  we  have  already  explained  above. 


November,  1766. 


APPENDIX. 

EXCERPTS   FROM   TURGOT'S  CORRESPONDENCE. 

I.    Turgoi  to  Hume,  July  2^,  ï']66. 

I  AM  tempted  to  send  you  at  the  same  time  a  trifle  of  a 
very  different  sort,  —  the  programme  of  an  academic  prize 
I  think  of  offering,  on  a  subject  we  have  sometimes  discussed. 
The  best  means  of  deciding  this,  like  all  other  questions,  is 
to  get  it  discussed  by  the  pubUc.  I  have  tried  to  set  forth 
the  state  of  the  question  in  a  clear  fashion,  as  well  as  the 
different  aspects  under  which  it  may  be  considered.  I  very 
much  wish  you  could  have  the  time  to  give  us  your  ideas. 
We  should  take  essays  on  the  subject  even  in  English.  Our 
economic  philosophers,  who  belong  to  Quesnay's  sect,^  will 
strongly  maintain  the  system  of  their  master.  This  is  a 
system  from  which  the  English  writers  have  been  far  re- 
moved, up  to  the  present  ;  and  it  is  too  hard  to  reconcile  its 
principles  with  the  ambition  to  monopohze  the  commerce 
of  the  universe  for  one  to  expect  that  they  will  adopt  it 
from  this  side  for  a  long  time  to  come.  It  would,  however, 
be  very  desirable  that  Mr.  Pitt,  and  all  those  who  lead  the 
nations,  should  think  as  Quesnay  does  upon  all  these  points. 
I  fear  greatly  lest  your  famous  demagogue  should  follow 
altogether  different  principles,  and  think  himself  interested 

^  Sectateurs  de  Quesnay. 
101 


102  APPENDIX 

in  keeping  up  in  your  nation  the  prejudice  you  have  called 
"The  Jealousy  of  Trade."  It  would  be  a  great  misfortune 
for  the  two  nations.  I  believe,  however,  the  almost  equal 
exhaustion  on  both  sides  will  prevent  this  folly  from  being 
long  maintained. 

2.  Hmne  to  Turgot,  Aug.  5,  1766. 

...  I  highly  approve  of  your  prize  ;  yet  why  so  much 
restrict  the  essays  of  the  competitors,  by  assuming,  as  a  rec- 
ognized truth,  that  all  taxes  fall  on  the  proprietors  of  land? 
You  know  that  no  government  of  any  age  or  country  has 
ever  relied  on  this  hypothesis  :  it  has  always  been  supposed 
that  taxes  fell  on  those  who  paid  them  upon  consuming  the 
products  ;  and  this  universal  rule,  added  to  the  evident 
appearance  of  things,  at  any  rate  leaves  some  room  for 
doubt.  Perhaps  it  would  not  have  been  bad  to  set  that 
very  question  itself  as  the  subject  of  discussion. 

3.  Turgot  to  Hume,  Sept.  7,  1766. 

I  don't  know  why  you  have  thought  that  those  who  would 
like  to  maintain  that  indirect  taxation  is  favourable  to  the 
proprietors  of  landed  estates  will  be  excluded  from  compet- 
ing for  my  prize.  I  assure  you  that  if  you  will  give  us  an 
essay  looking  at  the  question  from  that  point  of  view,  it  will 
be  very  well  received.  It  is  true  that  the  instructions  seem 
to  direct  authors  to  look  at  it  from  another.  But  the  fact  is 
I  have  offered  the  prize  rather  to  get  people  to  see  what 
they  can  do  in  the  way  of  estimating  the  effects  of  indirect 
taxation,  —  for  I  am  still  uncertain  how  the  exact  share  (of 


APPENDIX  103 

each  class  in  the  burden?  —  Ed.^  should  be  reckoned/  — 
than  to  get  a  discussion  of  the  general  question,  as  to  which 
my  mind  is  entirely  made  up." 

1  have  said  it  was  agreed  that  indirect  taxation  fell  back 
altogether  on  the  proprietors,  since  as  a  matter  of  fact  I 
have  supposed  that  most  of  those  who  defended  indirect 
taxation  for  other  reasons  have  agreed  as  to  this,  especially 
during  the  last  fifteen  or  twenty  years  ;  and  because  most  of 
the  people  agreed  with  it  with  whom  I  have  had  occasion 
to  talk  on  the  matter.  I  well  know  that  the  practice  of  no 
government  at  all  conforms  to  the  principle  ;  but,  in  the 
first  place,  you  know,  as  well  as  I  do,  that  the  principles  put 
into  practice  by  all  the  governments  do  not  change  as  easily 
as  speculative  principles.  The  financial  system  of  all  the 
peoples  was  formed  in  periods  when  men  gave  little  thought 
to  these  matters  ;  and,  although  people  might  be  quite  con- 
vinced that  it  was  established  on  weak  foundations,  it  would 
still  be  a  good  deal  of  trouble,  and  take  a  good  deal  of  time, 
to  remove  a  machine  in  full  working  and  substitute  another 
for  it.  You  know,  also,  as  well  as  I  do,  what  is  the  great 
aim  of  all  the  governments  of  the  earth  :  obedience  and 
money.  The  object  is,  as  the  saying  goes,  to  pluck  the  hen 
without  making  it  cry  out  ;  but  it  is  the  proprietors  who  cry 
out,  and  the  government  has  always  preferred  to  attack 
them  indirectly,  because  then  they  do  not  perceive  the  harm 
until  after  the  matter  has  become  law  ;  and,  moreover,  in- 
telligence is  not  widely  enough  distributed,  and  the  prin- 

^  Pour  engager  à  travailler  sur  l'appréciation  des  effets  de  l'impôt 
indirect,  évaluation  encore  incertaine  pour  moi  quant  à  la  quotité. 

2  J'ai  une  conviction  entière. 


104  APPENDIX 

ciples  involved  are  not  clearly  enough  proved,  for  them  to 
attribute  the  evil  they  suffer  to  its  true  cause.  I  am  always 
sorry  not  to  find  myself  in  accord  with  you.  But  I  rely 
upon  your  tolerance.  .  .  . 

4.   Hume  to  Turgot,  undated. 

...  I  am  tempted  to  say  a  word  on  the  political  ques- 
tion which  we  have  so  often  raised,  as  to  the  method  of 
establishing  taxes,  and  as  to  whether  it  is  better  to  place 
them  upon  landed  proprietors  or  upon  consumption.  You 
recognize  that,  as  the  pubhc  revenue  is  employed  for  the 
defence  of  the  entire  nation,  it  is  more  equitable  to  levy 
them  upon  everybody  ;  but  you  say  that  this  is  impracti- 
cable, the  taxes  will  ultimately  fall  upon  the  land,  and  it 
would  be  better  to  lay  them  there  in  the  first  instance.  You 
suppose,  then,  that  the  labourers  always  raise  the  price  of 
y  their  labour  in  proportion  to  the  taxes  ;  but  this  is  contrary 
i  to  experience.  Manual  labour  is  dearer  in  the  canton  of 
Neufchâtel,  and  in  other  parts  of  Switzerland,  where  there 
are  no  taxes,  than  in  the  neighbouring  provinces  of  France 
where  there  are  a  good  many.  There  are  scarcely  any  taxes 
in  the  English  colonies  ;  and  yet  labour  is  three  times  as  dear 
there  as  in  any  country  of  Europe.  There  are  heavy  taxes 
upon  consumption  in  Holland,  and  the  Republic  does  not 
possess  lands  upon  which  these  taxes  can  ultimately  fall. 

The  price  of  labour  will  always  depend  on  the  quantity  of 
offers  of  labour  and  the  quantity  of  the  demand,^  and  not 

1  Dépendra  de  la  quantité  des  offres  du  travail  et  de  la  quantité  de  la 
demande. 


APPENDIX  105 

upon  the  taxes.  Tradesmen  ^  who  manufacture  stuffs  ^  to  be 
exported  cannot  augment  the  price  of  their  labour  ;  because, 
in  that  case,  the  stuffs  would  cost  too  much  to  be  able  to  be 
sold  in  foreign  markets.  And  tradesmen  who  manufacture 
stuffs  for  consumption  within  the  country  are  equally  unable 
to  raise  their  price,  because  there  cannot  be  two  prices  for 
the  same  sort  of  labour.  This  applies  to  all  commodities 
whereof  part  is  exported,  —  i.e.  to  almost  all  commodities. 
Even  if  there  existed  some  commodities  whereof  no  part 
was  exported,  the  price  of  the  labour  employed  in  their  pro- 
duction could  not  rise  ;  for  the  rise  of  the  price  would 
induce  so  many  hands  to  turn  to  this  kind  of  industry  that 
the  prices  would  immediately  fall.  It  seems  to  me  that,  where 
there  is  a  tax  on  consumption,  the  immediate  consequence 
is  that  the  workpeople  either  consume  less  or  work  more. 
There  is  no  workman  who  is  not  nimble  enough  to  be  able 
to  add  a  few  additional  hours  to  his  week's  work  ;  and  there 
is  hardly  any  individual  so  poor  that  he  cannot  retrench 
somewhat  in  his  expenditure.  What  happens  when  corn 
goes  up  in  price?  Does  not  the  poor  man  live  more 
meagrely  and  work  harder?     A  tax  has  the  same  effect. 

I  beg  you  to  remember,  also,  that  besides  landed  proprie- 
tors and  poor  labourers,  there  is,  in  every  civilized  nation,  a 
very  considerable  and  very  opulent  body  of  persons,  which 
employs  its  capitals  in  commerce,  and  which  enjoys  a  large 
revenue  while  giving  work  to  the  poorer  class.  I  am  per- 
suaded that  in  France  and  in  England  the  revenues  of  this 
nature  are  more  considerable  than  those  which  come  from 

^  Les  commerçants.  2  Leg  étoffes. 


106  APPENDIX 

the  land  :  for  besides  merchants  properly  so  called,  I  in- 
clude in  this  class  all  the  shopkeepers  and  notable  trades- 
men of  every  kind.  Now  it  is  very  just  that  these  should 
pay  for  the  maintenance  of  the  community,  —  and  this 
cannot  be  brought  about  unless  the  taxes  are  placed  upon 
consumption.  It  seems  to  me  that  there  is  no  warrant 
for  saying  that  this  class  of  taxpayers  is  compelled  to 
shift  its  taxes  upon  the  landed  proprietors  ;  for  its  profits  ^ 
and  its  revenues  can  certainly  bear  a  deduction. 

5.    Turgot  to  Hume,  March  25,  1767. 

I  should  very  much  have  liked  to  enter  into  some  detail  on 
the  subject  of  taxation  ;  but  to  reply  to  your  objections  it 
would  have  been  necessary,  so  to  speak,  to  write  a  book  and 
earn  my  own  prize.  I  will  only  indicate  to  you  the  principle 
from  which  I  set  out,  and  which  I  believe  incontestable  :  it 
is,  that  there  is  no  other  revenue  possible  in  a  State  than  the 
sum  of  the  annual  productions  of  the  land  ;  that  the  total 
mass  of  these  productions  falls  into  two  parts  :  one  set  aside 
for^  the  reproduction  of  the  following  year,  which  com- 
prises not  only  the  portion  of  the  crops  that  the  under- 
takers of  agriculture  consume  in  kind,  but  also  all  they  use 
to  pay  the  wages  of  the  workmen  of  every  kind  who  labour 
for  them  :  blacksmiths,  wheelwrights,  saddlers,  weavers, 
tailors  &c  ;  it  includes,  also,  their  profits  and  the  interests 
upon  their  advances.  The  other  part  is  the  net  produce, 
which  the  farmer  pays  over  to  the  proprietor,  when  the 
person  of  the  latter  is  distinguished  from  that  of  the  culti- 

1  Bénéfices.  ^  Affectée  à. 


APPENDIX  107 

vator,  —  which  is  not  always  the  case  ;  the  proprietor  em- 
ploys it  to  pay  all  that  labour  for  him.  If  this  is  granted/ 
it  necessarily  follows  that  that  taxation  which  does  not  bear 
directly  upon  the  proprietor,  falls  either  upon  the  wage-earn- 
ers ^  who  live  upon  the  net  produce,  or  upon  those  whose 
labour  is  paid  on  the  part  of  the  cultivator.  If  wages  ^ 
have  been  reduced  by  competition  to  their  just  price,  they 
cannot  go  up  ;  and  as  they  cannot  go  up  except  at  the 
expense  of  those  who  pay  them,  one  part  falls  ultimately 
upon  the  proprietor  for  the  expenditure  he  engages  in  with 
his  net  product,  the  other  part  increases  the  expenditure 
of  the  cultivators,  who  are  consequently  obliged  to  give 
less  to  the  proprietor.  It  is,  therefore,  in  all  cases  the 
proprietor  who  pays. 

You  remark  that  I  am  supposing  that  wages  increase  in 
proportion  to  taxes,  and  that  experience  proves  the  falsity 
of  this  principle  :  and  you  justly  observe  that  it  is  not  taxes, 
high  or  low,  which  determine  the  price  of  wages,  but  simply 
the  relation  of  supply  and  demand.* 

This  principle  has  certainly  never  been  disputed  ;  it  is  the  ) 
only  principle  which  fixes  at  the  time  ^  the  price  of  all  the  \\ 
things  which  have  a  value  in  commerce.  But  one  must  dis-  ,| 
tinguish  two  prices,  the  current  price,''  which  is  established  ' 
by  the  relation  of  supply  to  demand,  and  the  fundamental  ) 
price,^  which,  in  the  case  of  a  commodity,  is  what  the  thing  / 
costs  the  wwTcmai£  In  the  case  of  the  workman's  wages,  ■; 
the   fundamental   price   is  what   his  subsistence  costs  the  / 

1  Cela  posé.  *  Le  rapport  de  l'offre  à  la  demande. 

2  Les  salariés.  ^  Immédiatement. 

3  Le  salaire.  ^  Le  prix  courant.        ^  Le  prix  fondamental. 

/ 


108  APPENDIX 

workman.  You  cannot  tax  the  man  who  receives  wages 
without  increasing  the  price  of  his  subsistence,  since  he  has 
to  add  to  his  old  expenditure  that  involved  by  the  tax. 
You  thus  increase  the  fundamental  price  of  labour.  But 
although  the  fundamental  price  be  not  the  immediate  prin- 
ciple of  the  current  value/  it  is  nevertheless  a  minimum 
below  which  it  cannot  fall.  For  if  a  merchant  loses  by  his 
trade,  he  ceases  to  sell  or  manufacture  ;  if  a  workman  can- 
not live  by  his  labour,  he  becomes  a  mendicant  or  leaves  the 
country.  That  is  not  all  :  it  is  necessary  that  the  workman 
obtain  a  certain  profit,^  to  provide  for  accidents,  to  bring  up 
his  family.  In  a  nation  where  trade  and  industry  are  free 
and  vigorous,  competition  fixes  this  profit  at  the  lowest  pos- 
sible rate.^  A  kind  of  equilibrium  establishes  itself  between 
the  value  of  all  the  productions  of  the  land,  the  consump- 
tion of  the  different  kinds  of  commodities,  the  different  sorts 
of  works,  the  number  of  men  employed  at  them,  and  the 
price  of  their  wages. 

Wages  can  be  fixed  and  remain  constantly  at  a  definite 
point  only  in  virtue  of  this  equilibrium,  and  of  the  influence 
which  all  the  parts  of  the  society,  all  the  branches  of  pro- 
duction and  commerce,  exercise  upon  one  another.  This 
granted,  if  you  change  one  of  the  weights,  a  movement 
cannot  but  result  from  it  in  the  whole  of  the  machine  which 
tends  to  restore  the  old  equilibrium.  The  proportion  which 
the  current  value  of  wages  bears  to  their  fundamental  value 
was  established  by  the  laws  of  this  equilibrium  and  by  the 

1  Le  principe  immédiat  de  la  valeur  courante. 

2  Un  certain  profit. 

8  Au  taux  le  plus  bas  qu'il  soit  possible. 


APPENDIX  109 

combination  of  all  the  circumstances  under  which  all  the 
parts  of  the  society  are  placed. 

You  augment  the  fundamental  value  :  the  circumstances 
which  have  before  fixed  the  proportion  which  the  current 
value  bears  to  this  fundamental  value  cannot  but  cause  the 
current  value  to  rise  until  the  proportion  is  re-established. 
I  am  aware  that  this  result  will  not  be  sudden  ;  and  that 
in  every  complicated  machine  there  are  frictions^  which 
delay  the  results^  most  infallibly  demonstrated  by  theory. 
Even  in  the  case  of  a  fluid  perfectly  homogeneous,  it  takes 
time  for  the  level  to  be  restored  ;  but  with  time  it  always 
is  restored.  It  is  the  same  with  the  equilibrium  of  the 
values  which  we  are  examining.  The  workman,  as  you 
say,  taxes  his  ingenuity  to  work  more  or  consume  less  ; 
but  all  this  is  only  temporary.^  Doubtless  there  is  no  man  i 
who  works  as  much  as  he  could.  But  it  is  no  more  natural  ' 
for  men  to  work  as  much  as  they  can  than  for  a  cord  to  be 
stretched  as  much  as  it  can  be.  There  is  a  degree  of  relaxa- 
tion necessary  in  every  machine,  without  which  it  would  run 
the  risk  of  breaking  at  any  moment.  This  degree  of  re- 
laxation in  the  case  of  labour  is  fixed  by  a  thousand  causes 
which  continue  to  operate  after  the  tax  is  imposed  ;  and 
consequently,  even  if  by  a  first  effort  the  tension  had  in- 
creased, things  would  not  be  long  in  regaining  their  natural 
shape. 

What  I  have  said  about  the  augmentation  of  labour  I 
also  say  about  the  diminution  of  consumption.  Wants  are 
always  the  same.^     That  kind  of  superfluity  out  of  which 

*  Des  frottements  qui  ralentissent  les  effets. 

-  Passager.  ^  Les  besoins  sont  toujours  les  mêmes. 


110  APPENDIX 

retrenchment  can,  strictly  speaking,  be  made,  is  neverthe- 
less a  necessary  element  in  the  usual  subsistence  of  the 
workmen  and  their  families.  MoHère's  miser  says  that  when 
dinner  is  laid  for  five,  a  sixth  can  always  make  a  meal  ;  but 
by  pushing  this  reasoning  a  little  further  one  would  quickly 
fall  into  absurdity.  I  add  that  the  diminution  of  consump- 
tion has  another  effect  upon  the  revenue  of  the  proprietor 
which  is  very  serious,  —  through  the  diminution  of  the  value 

)   of  commodities  and  of  the  products  of  his  land. 

/  I  do  not  enter  into  the  details  of  the  objection  drawn 
from  foreign  trade,  which  I  cannot  regard  as  a  very  impor- 
tant matter  ^  in  any  nation,  save  in  so  far  as  it  contributes  to 
augment  the  revenue  from  lands  ;  and  which,  moreover,  you 
cannot  tax  without  causing  it  to  diminish.  But  the  time 
fails  me,  and  I  am  forced  to  conclude,  although  I  should 
have  a  good  deal  to  say  as  to  the  inconveniences  caused  to 
the  consumers  by  a  tax  whereof  the  very  collection  involves 
a  perpetual  assault  on  the  liberty  of  the  citizens  :  they  have 
to  be  searched  in  custom-houses,  their  houses  have  to  be 
entered  for  aides  and  excises  \  not  to  mention  the  horrors  of 
smuggling,  and  of  the  sacrifice  of  human  life  to  the  pecuniary 
interest  of  the  treasury,  —  a  fine  sermon  legislation  preaches 
to  highwaymen  ! 

6.    Turgot  to  Du  Pont,  December  9,  1766. 

...  I  have  drawn  up  some  questions  for  the  two  Chinese 
I  have  mentioned  to  you  ;  and  to  enable  them  to  see  their 
object   and   meaning,  I  have  prefaced  them  by  a  sketchy 

1  Un  objet  bien  considérable. 


APPENDIX  111 

sort  of  analysis  ^  of  the  labours  of  Society  and  of  the  distri- 
bution of  riches.  I  have  put  no  algebra  into  it,  and  there 
is  nothing  of  the  TaàkûJLéconofnique  -  but  the  metaphysical 
part;  moreover  I  have  left  a  good  many  questions  on  one 
side  which  one  would  have  to  treat  to  make  the  work  com- 
plete. But  I  have  gone  pretty  thoroughly  into  what  con- 
cerns the  formation  and  the  movement^  of  capitals,  the 
interest  of  money^c  .  .": 

7.    Turgot  to  Du  PoJit,  February  2,  1770. 

.  .  .  The  passage  about  the  original  agricultural  ad- 
vances *  has  especially  troubled  me  ;  you  know  how  I  have 
argued  on  this  point  with  the  abbé  Baudeau  in  your  pres- 
ence. I  may  be  wrong,  but  everybody  likes  to  be  himself 
and  not  somebody  else.  .  .  .  These  additions  all  tend  to 
make  me  out  an  economist,  which  I  don't  wish  to  be  any 
more  than  an  encyclopaedist. 

8.    Turgot  to  Du  Pont,  February  20,  1770. 

.  .  .  Although  the  advances  which  you  call  foncières  con- 
tribute their  share  to  the  production  of  the  crops,  —  as  I 
should  have  said  if  my  object  had  been  to  expound  the 
principles  of  the  Tableau  économique,  yet  it  is  false  that  the 

1  Une  espèce  d'esquisse  de  l'analyse. 

-  [Quesnay's  Tableau  économique  (1758)  has  been  reproduced  in 
facsimile  for  the  British  Economic  Association,  1894.  (New  York  : 
The  Macmillan  Co.)] 

2  La  marche. 

*  L'endroit  des  avances  foncières.  [Adam  Smith,  Wealth  of  Nations, 
Bk.  iv,  Ch.  ix,  translates  dépenses  foncières  "ground  expenses."] 


112  APPENDIX 

avances  foncières  are  the  principle  of  property.^  ...     It  is 
this  alteration  which  has  given  me  most  annoyance. 

...  I  will  content  myself  with  simply  telling  you  this  : 
I  that  no  one  can  argue  from  what  I  have  said  that  slavery 
!  was  good  for  any  society,  even  in  its  infancy.  As  to  indi- 
viduals who  have  slaves,  that  is  another  matter.  I  should 
be  glad  to  think  you  are  right  in  maintaining  that  slavery 
is  for  no  one's  advantage,  for  it  is  an  abominable  and  bar- 
barous injustice  ;  but  I  very  much  fear  that  you  are  mis- 
taken, and  that  this  injustice  may  sometimes  be  useful  to 
the  man  that  perpetrates  it.  .  .  . 

9.    Turgot  to  Dii  Font,  March  23,  1770. 

To  suppose  that  saving  and  hoarding^  are  synonymous, 
what  a  confusion  of  ideas,  or  rather  of  language  !  and  that 
to  cover  certain  mistaken  expressions  which  fell  from  the 
good  doctor^  in  his  earlier  writings.  Oh,  this  sectarian 
spirit  !  * 

10.   Hume  to  Morellet,  July  10,  1769. 

I  see  you  take  care  in  your  prospectus  not  to  offend  your 
economists  by  a  declaration  of  your  views  ;  and  in  this  I 
commend  your  prudence.  But  I  hope  in  your  work  you 
will  batter  them,  crush  them,  pound  them,  reduce  them  to 
dust  and  ashes  !  The  fact  is  they  are  the  most  fanciful  *  and 
arrogant  set  of  men  to  be  found  nowadays,  since  the  destruc- 
tion of  the  Sorbonne.  ...  I  ask  myself  with  amazement 
what  can  have  induced  our  friend  M.  Turgot  to  join  them.^ 

1  Le  principe  de  la  propriété.        ^  [Quesnay.]  ^  Chimérique. 

2  Épargner  et  thésauriser.  *  Esprit  de  secte.       ^  S'associer  à  eux. 


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